Executive Summary
1.0 Introduction The Halifax Port Authority (HPA) and Halifax Regional Municipality (HRM) commissioned the present study to evaluate the role that an Inland Terminal or truck access to the railcut through the Halifax peninsula could play in alleviating some of the challenges presented by trucking activity within HRM. The study includes a site selection evaluation for a terminal to be located within Nova Scotia, an operational analysis of the inland terminal concept and an economic analysis of an inland terminal, as well as an assessment of the feasibility of the railcut option. 2.0 Current Situation In 2004 the Port handled about 525,000 TEUs of intermodal cargo. The same year, approximately 25,000 intermodal units were handled through the Halifax Intermodal Terminal (HIT). Overall, the number of trucks calling at all of the intermodal terminals in the city averages 343 trucks (686 one way) per normal business day. The estimated practical port capacity of the existing terminals in Halifax is 800,000 to 900,000 TEUs per year. The existing terminals, in effect, act as inland terminals and empty storage yards for local cargo within trucking distance of Halifax. 3.0 Best Practices Three other ports – Auckland, Vancouver and New Orleans – were examined, and there are a number of conclusions that can be drawn from their experience: 1) Chronic congestion is required somewhere in the existing system to make it work. 2) An inland terminal appears to achieve better asset utilization for both ports and truckers. 3) Shippers get better and quicker access to cargo. They avoid long queues getting into container terminals and highway congestion getting to and from the terminal. 4) It helps to have the port and other partners invest in the project. 4.0 Vision for New Inland Terminal (NIT) All truck-related activities presently carried out at HIT and at the port’s container terminals would be relocated to the New Inland Terminal (NIT) that would serve local and regional container markets. A NIT would free up land presently used for empty storage, truck marshalling, gate processing and truck roadways on the existing terminals, thus increasing port capacity by as much as 250,000 TEUs, and postponing the need for a third container terminal. The NIT would become an expansion of the port terminals, but on property that is substantially less expensive to develop compared to waterfront areas. It would also be

located to provide ancillary business opportunities, particularly related to distribution and transload activities. The NIT would connect operationally with the port terminals by using dedicated rail shuttles. Sufficient captive rail cars would be used to ensure that at least 95% of import containers destined for the local market, as well as repositioned empties, would be handled directly from ship to rail. 5.0 NIT Site Selection In order to determine the best site, a site characteristics model with 35 parameters was employed. The sites studied were HIT, Rockingham, Rocky Lake, Oakfield, Milford Station, and Debert. They scored as follows:
Sites considered Site H.I.T. Rockingham Rocky Lake Oakfield Lantz Milford Station Debert Legend NO GO Issue Issues No Issue Guiding Principles No No Yes Yes Yes Yes Yes Size Insufficient Expensive fill More Quarrying Insufficient Marginal length Sufficient Ample Expansion Major Cost Major Cost Nearby Insufficient Nearby Nearby Good Topography Good Good Good Unacceptable Flood plain Acceptable Good Compatible Neighbours Yes Mitigation Mostly Mitgation Mitgation Mostly Yes

Shuttle Distance OK OK OK Fair Marginal Marginal Too Far

The study recommended that both Milford Station and Rocky Lake be short-listed. Upon further evaluation of the capital and operating costs and benefits of these two sites, it was recommended that Rocky Lake be selected for conceptual design and closer analysis. 6.0 NIT Design The NIT is configured to follow the shoreline of Rocky Lake to take advantage of the level grade and existing quarried areas to minimize the amount of rock excavation required. Further development of this site could allow the CN mainline and NIT to be more efficiently linked to the Dartmouth branch. 7.0 Shuttle Operation The rail shuttle has two basic purposes: 1. Conveyance of locally-destined import containers from the port terminals to NIT. 2. Conveyance of locally produced export containers from NIT to the port terminals. The proximity of Rocky Lake to the port allows enough flexibility to handle the service requirements at a reasonable cost. Over the long term, the shuttle costs should remain relatively constant as port volumes increase. The peaks should fill in, making better use

of the dedicated railcar fleet. Longer shuttle trains will only incrementally add line haul costs. Thus, the shuttle will become increasingly cost effective per unit moved as volumes grow. 8.0 The Railway Cut Truckway The Railway Cut, linking the Bayers Road/Bi-High entrance and the South End Terminals, can be looked upon as an underutilized transportation resource within HRM. However, CN has determined that paving over the tracks is impractical and only oneway traffic could be accommodated. The use of the railcut as a truckway could remove an estimated 270 one-way truck transits from downtown streets. While the truckway has a beneficial impact on trucking times and costs, road maintenance and greenhouse gas emissions, these benefits are insufficient to justify the $40M required to modify the railcut to accommodate one-way truck traffic. 9.0 Economic Analysis The Port of Halifax has enormous economic impact on HRM and the Atlantic Region. While neither the NIT nor the railway cut truckway option has a positive benefit/cost on its own, the NIT has potential justification in the postponement of major capital investment by increasing the effective capacity of the port. An investment of $60M in NIT provides up to 250,000 TEUs of handling capacity for the port, whereas according to the Maersk-Sealand proposal of 1998 for a new ocean terminal (NOT), an investment of $300M would be required to provide an additional 550,000 TEUs of capacity. The NIT can postpone the capital investment required for a NOT and is a cost-effective alternative to a third container terminal when the Port approaches its capacity. The NIT allows the Port to grow and to continue to generate significant economic benefits. 10.0 Stakeholder Consultations A number of stakeholders were consulted during the course of this study. Concern was expressed over who would operate the shuttle and the NIT and how service levels would be maintained in the long term. Shipping lines, in particular, expressed concerns that they would end up paying for the extra costs incurred and yet be unable to recover these costs from either offsetting savings or from the cargo itself. 11.0 Value Added Opportunities A NIT could act as a catalyst in the development of a new distribution park at the north end of Burnside Industrial Park, providing synergies to shippers and national distributors and retailers. At a minimum, the terminal provides better asset utilization for the trucking industry. There will also be opportunities to do container storage, repair, reefer maintenance and trip preparation, in addition to container leasing.

12.0 Value Proposition The NIT reduces truck traffic in the city and saves wear and tear on local roads. It also reduces air pollution and Greenhouse Gases (GHGs). There is also some potential to use hybrid locomotive technology for the shuttle operation. The NIT increases the effective capacity of existing container terminals and postpones the need to construct a new terminal when the port reaches its capacity. The NIT also allows CN to move HIT and consolidate its volumes with NIT, leading to efficiencies. CN would also have the option to consolidate its Rockingham and Dartmouth yard activities at one location at some point in the future. The project results in total economic impact of $130M in the construction phase. The more interesting and longer term economic benefit is that the expansion allows the port to continue to provide its economic impact (measured at $700M per year in 2001). At this rate and under some assumptions concerning growth in port volumes (3.5%), the port's overall economic impact will include 15,606 direct and indirect jobs and more than$1.1B in annual income generation by 2022. The value of the NIT is in preserving the continuation of economic benefits so that the growth of the port can reach this level of activity and not be encumbered by capacity limitations which will inhibit these incremental economic benefits. 13.0 Conclusions Of the two alternatives considered to remove truck traffic from city streets, the NIT concept is by far the best option. However, there is not enough congestion at either container terminal or in downtown Halifax to justify the NIT at present (2005). Moreover, whatever port congestion exists in Halifax does not relate to locally- or regionally-trucked cargo, but to moving cargo inland by rail to Quebec, Ontario and the US Midwest. From an overall perspective, NIT operating costs can be slightly better than break-even despite the additional handling, as long as sufficient captive railcars are provided to ensure that locally-destined freight can go directly to rail . The actual impact on the cost of moving local cargo will depend on negotiations amongst the interested parties and how much each is willing to contribute towards achieving a positive outcome. The NIT’s economic justification is primarily based on the avoidance of capital costs required to build a new container terminal. An investment of $60M in NIT provides an additional 250,000 TEUs of handling capacity, whereas an investment of $300M in a New Ocean Terminal provides an additional 550,000s TEUs of capacity. It is recommended that the Halifax Port Authority and partners adopt a plan now to have a NIT in operation by the time the port reaches its practical capacity. Negotiations should begin as soon as possible to secure the quarry site and the northern rail right-of-way around Rocky Lake. Some combination of HRM, HPA and CN should acquire these properties in a prepared state, and work out the framework for moving forward.

When the existing terminals are within 1-2 years of reaching capacity, the terminal should be built (assuming the economics are still positive) and an operating company established. A management strategy should be implemented to work with stakeholders (terminals, shipping lines, shippers, truckers, labour) to ensure a smooth transition to the new entity. Consideration should be given to providing the new entity with short-term operating support.

1.0 Introduction
The Halifax Regional Municipality (HRM) was established in 1996, amalgamating the former cities of Halifax and Dartmouth, the town of Bedford and the County of Halifax. It now comprises 360,000 inhabitants in a municipality that stretches from Ecum Secum in the east to Hubbards in the west. It is the 13th largest metropolitan region in Canada, with one of the best educated workforces and lowest rates of unemployment in the country. Throughout its 256-year history, the city and its port have been synonymous. The Port of Halifax is one of Canada's largest commercial ports and one of the finest harbours in the world. Located on the Great Circle Route, the Port of Halifax is the only one on the east coast of North America capable of handling fully laden post-Panamax container vessels. The Halifax Port Authority (HPA) was established in 1999 as an Agent of the Crown. The HPA administers and promotes Halifax Harbour, including two purpose-built container terminals – South End and Fairview Cove. The Port is located within the jurisdictional boundaries of HRM. A study undertaken by HRM in the fall of 2003 counted a total of 568 large trucks entering or exiting the downtown via Barrington Street over an 11-hour period. This volume of truck traffic impacts the downtown core in several ways, including noise and exhaust emissions, wear and tear on the roadway surface, traffic congestion, and risk from collision and spills. The HPA and HRM commissioned this study to evaluate the role that an Inland Terminal could play in alleviating some of the challenges presented by trucking activity, while creating a potential ‘win-win’ scenario in smoothing logistical challenges for the freight industry, and providing a platform for future growth of the Port, the Municipality and the regional economy. The starting point to assemble the necessary critical mass could be the container traffic at the Port of Halifax. At the same time, there are additional complementary opportunities which could be assembled in concert with the development of an inland terminal. One potential solution is to move the CN Intermodal yard at Richmond Terminal to a site outside the city, where it would handle truck traffic and domestic intermodal cargo, as well as being the truck hand-off for international cargo moving through the port’s container terminals. Containers would be moved to and from the intermodal yard by a rail shuttle, reducing the movement of trucks through peninsular Halifax. It could postpone the need for terminal expansion, except for lengthening of berths to accommodate ever-larger vessels, and provide considerable operating efficiencies for the terminals. Shuttling containers by train to an inland terminal for transfer to truck will add an additional ‘lift’ to the container, which in turn adds to its shipping cost. However, there could be benefits to be gained by the Port in transferring the container storage function from the confined port area to a location where storage space is more easily obtained. Transporting most of these containers out of the urban core by train, then transferring them to truck at an inland terminal would significantly reduce truck traffic on the peninsula. Container traffic from the South End Terminal is the main interest of HRM, as the impact of these trucks is a greater issue downtown than it is at Fairview Cove. However, traffic to and from CeresGlobal terminal at Fairview Cove is also considered.

A second concept is the development of an exclusive truckway connecting the South End Terminal to a point outside Halifax’s peninsular core. Although a functional plan and capital cost analysis for implementation of this concept were completed in 2003, the operational benefits, if any, have not been explored until now. The proposed truckway would be integrated into a fully active railway corridor. The HPA and HRM were therefore interested in evaluating the merits of an Inland Terminal as a long-term option. This study examines whether a solution that relieves the impact of trucks passing through the historic downtown waterfront district is economically and technically feasible. ideally, it would also create an intermodal transfer process that enhances the supply chains of local retailers, Halifax-based industry and the economy generally. The proponents of the study seek to evaluate the quality and quantity of improvements that an inland terminal can bring to both the existing situation and the long term. The study will also determine the economic effects of operating a truckway and provide an economic comparison of the two proposed concepts. The study examines 1) the economic analysis of an inland terminal; 2) an operational analysis of the concept; and 3) a site selection evaluation for such a terminal to be located in Nova Scotia. 1.1 Background The genesis of the proposed study represents a confluence of several ideas and circumstances. HRM has been seeking ways to mitigate the impact of truck traffic entering or exiting port terminals located in the south end of the city. The issue is becoming especially critical as more residential development takes place downtown, and is highlighted by cruise ship visits during non-winter months. In 2003, the city commissioned a study of the so-called railway cut which runs from Halterm / Ocean Terminals through to the vicinity of Fairview Cove, to determine whether it could double as both a rail and truck corridor. The study concluded it would cost $40 M to make the necessary improvements and build the infrastructure required to effect the desired result. Since the fall of 2002, CN Rail has instituted major changes in the way it serves customers of the Port of Halifax, which has led to congestion at the port’s two container terminals, one in particular. Whereas prior to September 2002, containers discharged from ships were transferred directly from ship to rail, the railway now operates on a ‘scheduled’ basis. Cargo is most often grounded before it is loaded to rail and sent to inland destinations. Neither Halifax terminal was designed for this type of operation, which has led to delays in getting containers to inland destinations. Many North American ports are experiencing similar types of congestion. The type of inland terminal that is prevalent in other ports, as well as many inland destinations, may be applicable in the current Halifax context. This study examines ‘best practices’ at three such ports – Auckland, New Zealand, Vancouver, BC and New Orleans, LA. The HPA, along with several partners including the Greater Halifax Partnership, concluded the Greater Halifax Distribution Study in 2004. That study suggested the port and the city could lever already existing shipping and distribution activity, as well as additional regional or national distribution activity, to attract distribution centres, third party logistics providers (3PLs) or transload facilities to HRM. Certain criteria needed to be met, including access to large tracts of land adjacent to rail and highways. This

present study evaluates the impact that an inland terminal could have on this type of activity. There could be a considerable economic development upside to this opportunity, which would result in operating efficiencies at the port, and a more efficient hand-off to and from CN’s mainline, both in and outbound. 1.2 Objectives The study has several overall objectives: 1) reducing truck traffic through peninsular Halifax Regional Municipality; 2) increasing port cargo handling capacity; 3) improving truck turnaround times; 4) providing a nucleus to the development of additional distribution activity in and around the port. In addition, each stakeholder has its own unique objectives: 1.2.1 Halifax Regional Municipality The objectives of HRM are to 1) reduce congestion on Hollis and Lower Water St.; 2) gain another access into the city core; 3) reduce wear and tear on city streets; 4) improve the commuter experience and reduce commuter traffic; 5) reduce vehicular emissions; 6) provide a nucleus for distribution and other value-added industrial activity. 1.2.2 Halifax Port Authority The Halifax Port Authority wishes to 1) maximize the use of its existing terminals; 2) postpone major dock and infrastructure investment; 3) lower the risk of an environmental incident; 4) improve the efficiency of the overall Halifax gateway; 5) provide a nucleus for distribution centre activity so as to attract additional cargo through the port. 1.2.3 CN As a major stakeholder in the Halifax region, CN’s objectives are fourfold: 1) reduce inefficiencies associated with the operation of the existing domestic terminal (HIT); 2) recoup the value of lands owned by CN; 3) maintain operational flexibility; 4) gain operational efficiencies. 1.2.4 Container Terminals In general, the container terminals seek to 1) simplify the handling process; 2) reduce the costs of handling; 3) increase throughput capacity by reducing on-site storage; and 4) return to a direct ship-to-rail operation. 1.2.5 Trucking Industry The trucking industry has a desire to 1) improve unit productivity; 2) reduce costs of providing service; 3) increase gate hours; 4) provide faster turnaround at terminals; and 5) avoid congested routes.

1.2.6 Labour Objectives Labour has two primary objectives: 1) protect the port’s competitive position; 2) protect and enhance the members’ income and working conditions. 1.3 Guiding Principles of the Study The following guiding principles were adhered to throughout the study: 1) a holistic approach to the problem and potential outcomes; 2) a ‘level playing field’ for both major container terminals located in the port; 3) the desire for no net increase in costs to carriers serving the Port of Halifax; 4) all activities to be commercially viable; and 5) the NIT is to be located along the CN mainline.

2.0 Current Situation
2.1 Volumes In 2004 the Port handled some 525,000 TEUs of intermodal freight, approximately 60% of which originates in or is destined to Montreal, Toronto, Chicago, etc. Another 20% (10% counted twice) of this volume is transhipment cargo either from one ocean service to another or between a feeder service and an ocean carrier. The remaining 20% is trucked to the local market. Most of this cargo is handled at one of the two dedicated container terminals in Halifax – Halterm or Ceres. However, containers are also regularly handled by Logistec, and are occasionally carried on bulk and break bulk vessels. For the purposes of this study, the container volumes handled by Logistec and Halterm are combined into ‘Halterm’. Port terminals in Halifax act as distribution terminals for the local market, holding import containers until the consignee is ready (or able) to pick up the freight. The terminals also provide handling and storage of empty containers. An estimated 30% of all import containers into the local market return to the port terminals as empties awaiting another booking. Terminals also regularly handle empties to and from rail to balance container fleets for the shipping lines. They move containers around for repairs, prepare refrigerated containers for bookings (pre-tripping reefers) and provide other handling services on the terminal per the shipping lines’ requests. A portion of the cargo destined for rail and transhipment destinations is targeted for full inspection by local Customs, CFIA or Drug Interdiction authorities. These boxes temporarily become local destination boxes, and after inspection are returned to the terminals to continue their normal voyage. In 2004, approximately 25,000 intermodal units were handled through the Halifax Intermodal Terminal (HIT). Overall, the number of trucks calling at all of the intermodal terminals in the city averages 343 per working day. This estimate is based on 90% truck balance, i.e. 90% of the trucks calling at these terminals are both bringing in a container and picking up a container, with only 10% making a single move. 2.2 Infrastructure and Container Handling There are two main container terminals in the Port of Halifax – Halterm in the south end and CeresGlobal at Fairview Cove. There is also a facility at Ocean Terminals operated by Logistec that handles a number of smaller container services. Halterm was built in the late 1960s to handle freight shipped in containers, a relatively new idea at the time. The concept caught on and the industry grew very quickly. The Fairview Cove terminal was built between 1978-81 to increase the capacity for container handling in Halifax and to provide a competitive alternative to Halterm. The Fairview Cove terminal is operated by CeresGlobal, a division of NYK Line, which acquired Cerescorp in 2001. The majority of intermodal freight moving through the port is destined for points that are best served by rail. The distances from the Port of Halifax to its main markets of

Montreal, Toronto and the US Midwest, make inland transportation by road uneconomical. As a gateway, Halifax must compete with alternative routings such as the ports of New York and Montreal, which are closer to these major inland markets. Both Halifax terminals have on-dock rail and were designed primarily as ship to rail transfer facilities. Until recently nearly all the import containers arriving in Halifax would be handled directly to rail as part of the offloading sequence. More recently, cost saving measures implemented by CN, such as IMX and tighter railcar supply, have led to grounding significantly more of these import containers destined for rail. Containers to/from markets such as New Brunswick, Eastern Quebec, Prince Edward Island and Nova Scotia are generally trucked directly to the shipper's door from the container terminals. When intermodal transportation started in Halifax, the market share within trucking distance was less than 10%. The higher growth rate of this segment of the market is due, at least in part, to the access to world markets the Port of Halifax provides to regional producers and importers, as well as the comparative decline of the port of Saint John as a container gateway. Both major Halifax terminals have post-Panamax ship-to-shore cranes and the capacity to handle the largest containerships in the world today, although all of the ships presently calling the port are of Panamax size or smaller. Import containers are taken away from the cranes on chassis pulled by hustlers and directed to either a rail track, if a suitable railcar slot is available, or to a stacking area. Containers are removed from the hustler chassis by either a top-lifter or a Rubber Tired Gantry (RTG) and either loaded to a railcar or transferred to a stack for temporary storage. The reverse cycle is very similar, with the ship being supplied primarily from stacks of containers previously received from truck, rail or trans-shipment, sorted and segregated for loading by type, destination and weight. An export container is removed from the stack by an RTG and loaded onto a chassis that is then hauled by a hustler to the ship-to-shore cranes according to a pre-planned loading pattern for the vessel. A ship-to shore crane then takes the container off the chassis and positions it in the designated slot on the ship. Both terminals operate truck gates on weekdays to handle containers hauled over the road and can at times work rail 19 hours per day, 7 days a week, according to demand. Handling containers to/from ground (stacks) from/to rail requires a machine to handle the container at either end of the cycle and a hustler to transport the box between the two locations. Handling to/from truck from/to stack is accomplished by allowing the truck to enter the terminal and go to the stack for pick-up or delivery where the container is handled with a top-lifter or reach stacker, depending on the preferred method of working a particular stack and equipment availability. For the purposes of this study, a terminal handling cycle is considered a handling irrespective of the type of cycle or the type of equipment employed. Halterm regularly operates a truck gate on Friday evenings and Saturday mornings to meet the service requirements of Oceanex, a shipping line that transports primarily domestic freight and acts as a short-sea feeder service to Newfoundland for international

freight. Domestic traffic tends to be much more time sensitive than international cargo and often arrives ‘just in time’ for shipment. Ceres generally operates a truck gate only on weekdays but offers extended hours of service to cope with their higher volumes and still maintain a reasonable truck turnaround. Both terminals presently act as empty storage facilities for their customers. Containers are stored as empties on the terminal awaiting a freight booking. They are generally segregated by line, size and type and occupy a significant land area, although they are block-stowed to minimize land use. On occasion, specific containers need to be dug out of these block stows. As a consequence of the empties being stored on the container terminals, container repairs (at least the minor ones) are performed on the terminals. Electrical plugs are available on the terminals for temperature-controlled containers (reefers). Both the temporary storage of loaded reefers and the pre-tripping of empty reefers are performed on the terminals. Pre-tripping requires an empty reefer to be handled to a plug-in to be pre-set to its appropriate temperature and tested prior to being dispatched to a booking. Often the container must be repositioned to the empty reefer stack after pre-tripping as reefer plugs are often in short supply. Logistec handles containers on and off ships using a mobile crane or ship’s gear. The process is very similar to the process used at the larger terminals. Containers are handled from the ship to a chassis, hauled by a hustler to a storage area and grounded with a top-lifter, awaiting transfer to rail. Truck servicing is performed as required and is sometimes scheduled. The volume of truck traffic is not sufficient to justify a daily gate operation. Assuming container volumes grow over the next few years and port terminals consume presently unused capacity (principally in terms of land area), container stacks will become fuller, containers will be stacked higher, and more interference will be experienced with the trucks on the terminal. Truck gate times will need to be further extended, pushing a higher proportion of the work into overtime periods and increasing the average handling costs. As a terminal reaches its sustainable capacity, congestion occurs more and more frequently. Higher and fuller stacking requires more moves to access a particular container for pick-up and reduces the effective productivity of the equipment and of labour. Backlogs can occur and can take a very long time to clear up. 2.3 Halifax Intermodal Terminal (HIT) HIT is CN’s terminal for domestic freight. While initially set up to handle trailers, the terminal has seen a shift in its intermodal traffic as more and more domestic freight is being handled in containers, either high cube pallet-wide 53 ft domestic containers or ISO-type international containers that require repositioning into export markets. There are still trailers being handled at HIT, but the traffic continues to shift towards containerization. RTGs with lift arms are used to handle containers and trailers to and from double-stacked railcars to a chassis.

Generally HIT will live-load export (from Halifax) directly from trucks as they arrive at the terminal. The import (to Halifax) units are handled to wheels (ground in the case of a trailer, chassis in the case of a container) and are stored on wheels for direct delivery to trucks. Hustlers are used to shunt the trailers and chassis around the terminal as required. The terminal is presently underutilized and this underutilization has increased handling costs. 2.4 Capacity The estimated practical port capacity of the existing terminals in Halifax is 800,000 TEUs per year. With some investment and incremental land annexation, there is probably another 100,000 TEUs of overall practical capacity that could be squeezed out of the system at some relatively minor (compared to the alternatives) costs. Port capacity is limited by a number of factors;  Quay length and berthing capacity;  Equipment – ship to shore cranes;  Storage areas (generally the most common limitation). The nature of the business in Halifax is such that the practical port capacity is limited primarily by storage area. Large ships exchanging a small proportion of their containers in Halifax have driven the port and terminals to provide berths and quay cranes to accommodate the random nature of the calls and their requirements for crane guarantees. Berths are not highly occupied and quay cranes can be added as required. Land area for storage is much more difficult to create. The concept of a NIT would free up land presently used for empty storage, truck marshalling, gate processing and truck roadways on the existing terminals. The incremental port capacity created by the NIT could be as much as 250,000 TEUs per year when the port reaches its practical capacity. 2.5 Traffic Distribution There is very little information available on the distribution of local intermodal traffic. In order to develop a realistic pattern for distribution within the local market, five of the major shipping lines calling Halifax were consulted and asked to provide distribution data in percentages by zone. In most cases their distribution patterns are very similar. These five shipping lines represent almost two-thirds of the total port traffic, and the weighted average of their traffic distribution is used for the purposes of this study. The traffic is divided into the following zones: - Truro and beyond (includes any traffic passing through Truro) - The Annapolis Valley - The South Shore of Nova Scotia - Burnside Industrial Park - Bayers Lake - Other areas within the Halifax Regional Municipality (HRM)

As can be seen in Figure 2.1, 60% of all the cargo trucked to and from the Port of Halifax has an origin/destination of Truro or beyond. Within HRM, 80% of the containers are destined to or are coming from Burnside Industrial Park. Figure 2.1 Container origin/destinations Proportion of port traffic
Burnside 17% Bayers Lake 3% Other HRM 1% Truro and beyond 60% Valley 5% South Shore 13%

For each of these origin/destinations, a geographic node (a point through which all this traffic must transit) was chosen as a reference point to compare the advantages/disadvantages of certain proposed sites. The change in transportation distances and cost that would result from the NIT being situated at a particular site can then be quantified. As an example, the intersection between highways 101 and 102 was chosen as the node for the Annapolis Valley zone. Figure 2.2 shows the distances between these node points and the existing and proposed new inland terminals. Figure 2.2 Truck distances (Kilometres)
Burnside Halterm Ceres HIT Quarry Milford Station Rail Cut 15 7 8 10 38 14 Bayers Other HRM Lake 13 9 11 17 51 17 4 5 3 25 59 13 Truro and beyond 60 51 53 47 6 59 Valley 25 20 22 5 39 28 South Shore 16 11 13 24 58 19

For the purposes of this study it was assumed that all the intermodal domestic traffic is destined to HRM and has the same distribution pattern within HRM as the ocean freight. Most of the domestic intermodal traffic to/from areas beyond Truro would more likely be handled at CN’s Moncton Intermodal Terminal. In addition, most of the consolidation traffic to/from the Valley and South Shore would first be routed to a Halifax cross-dock or warehousing facility.

3.0 Best Practices
The Alameda Corridor in Los Angeles is probably the most obvious example of an inland terminal in North America. However, its cost and volume projections, as well as the annual throughput of the L.A./Long Beach port complex are beyond the scale of anything contemplated for Halifax and thus not really relevant in the present context. Three other inland terminals, located in Vancouver, New Orleans and Auckland, New Zealand, were examined for this study. 3.1 Auckland Auckland is the largest city in New Zealand, with a population of 1.4 million. Like Halifax, the city of Auckland and its port have a symbiotic relationship. Figure 3.1: City of Auckland, with container terminals in foreground

Ports of Auckland Limited operates two ports, one in Auckland and another at Onehunga. The one in Auckland has two container terminals, Axis Fergusson and Axis Bledsoe, less than 2 km apart, and in the middle are conventional wharves. Ports of Auckland is also the stevedoring company. There is no competition within the port, but the company competes with other ports, which are all listed companies on the New Zealand stock exchange. Ports of Auckland is 80% owned by the Auckland Regional Council and is a profitable corporation. In 2004, Axis Ferguson handled 380,000 TEUs and Axis Bledsoe 280,000 TEUs. The general wharves handled 100,000 TEUs, for a total of 760,000 TEUs. Container terminals in Auckland have competition from Tauranga (400,000 TEUs) about 200 km away, which has its own inland terminal in Auckland. Auckland has been losing market share to Tauranga and has seen cargo declines in the past two years. For Auckland there are two primary motivations for building inland terminals: 1) taking trucks off city roads during daytime; 2) taking vehicles off roads and putting them onto rail at all times during day and night. Similar to the concept studied in this report, there are no problems yet with port terminal capacity but it is expected to become an issue

within a few years. Auckland’s inland terminals are viewed by Ports of Auckland Limited as providing additional capacity at the seaport. The other advantage is the increased utilization of trucks; at present only 12% of trucks have two-way loads, which represents a cost in the supply chain. Strategically, Ports of Auckland wants to create up to five inland terminals. Figure 3.2: Ports of Auckland Inland Terminal Locations

Auckland is a major centre for imports and exports but most of its exports originate about 25 km south of the city. The inland terminals can provide a service to importers that is either fast or slow, i.e. they can provide storage for them if the shipment is not urgent. They will also stuff and destuff containers there. In going ahead with the development of its first inland terminal, Ports of Auckland believed it could run such a terminal and make a reasonable rate of return on the investment, pricing it the same as going in and out of the port by truck. Significantly, the port needs congestion in the city’s transportation system to make the inland terminal concept work. It also needs two-way loads and realistic trucking prices that take into account both distance and time. The port pays for the truck shuttle, negotiating the price with the truckers rather than having the steamship lines do so. The trucks can do 2-3 runs at night in the same time as one during the day, yielding better asset utilization The port pays the cost and passes it on to consignee or shipper. Prices are as follows: NZ$95 / 40’; NZ$65 / 20’; NZ$95 / 20’ heavy. (New Zealand currency trades at USD$0.69 vs USD$0.84 for the Canadian dollar.) The port is working on bringing rail onto the terminal, which it may subsidize slightly.

Empties are stored on site. Empty activity is quite different as it is aligned to the cargo interest and what is best for the supply chain. The individual shipping lines have about six empty yards scattered around Auckland, whereas the port stores boxes for all shipping lines. The port has also recently invested in a container depot. Figure 3.3: Ports of Auckland, East Tamaki Inland Terminal

There are other issues at play. Export cargo is very scattered throughout the North Island and it is easy for other ports such as Tauranga with its own inland terminals to compete with Ports of Auckland. Tauranga, which is located 200 kms from Auckland has its own inland terminal called Metroport right in Auckland, and this terminal is a loss leader. The port pays for the full move, but they reason that they get a return through stevedoring and port charges. Tauranga presently handles 400,000 TEU per annum. To help stave off competition, Auckland’s future strategy therefore includes the development of 4-5 inland ports beyond the Auckland region. Rail is used for importers and exporters outside Auckland, which is how Auckland competes with Tauranga. Ports of Auckland Limited has a number of projects ready to be developed. The East Tamaki terminal will be 10 hectares in size, with 4 hectares of rail exchange area. Stage 1 is 5 hectares but the ultimate design is for 200,000–300,000 TEUs, depending on dwell time. In the early stages, dwell time will be extended to attract customers. The 5-hectare site includes a truck exchange and small site buildings with 380 slots for empties and 350 for full containers. The terminal is equipped with reach stackers and top lifters and containers are stacked up to 4 high, and 3 deep. Auckland allocated the costs and benefits of developing its inland terminals as follows: The transport community wanted the port to do it for nothing, whereas the port thinks it will eventually save costs at the seaport by freeing up space on the terminals and postponing the need for expensive expansion of the terminals. The different components are paid for by the cargo interests. In terms of Halifax, Auckland recommends the port focus on cargo interests, not the shipping lines or the transport community. It should be sold on the basis of storage, delivery and speed. Only 12% of Auckland’s trucks had 2-way moves before the inland terminals were introduced. It is also better for consignees to collect their cargo closer to where it is going or originating. The port expects it will recover most of the costs involved, but it will aggressively price ‘strategic’ cargoes that could move via competing ports. Not all stakeholders are comfortable with adding a link in the transportation chain, and some cargo interests will not use the inland terminals unless forced to do so. Some importers have their own yards and receive at night and have efficiencies already built

in. They are, however, trying to get them to shift as land and equipment are expensive and could be used for something else. Only 13% of Auckland’s volume presently goes by rail to an inland terminal. It moves 34 TEUs each way and need 75% utilization both ways to compete with truck. It is likely that up to 40 TEUs will be achieved with no additional terminal capacity required. The track is owned by the state and there is one user, a public company (TOLL) which is an Australian logistics company. The port authority buys and underwrites the rail shuttle. The inland terminal has to be used as an empty storage yard to optimize the local delivery aspect. Export empties are 35% of total export TEUs. In other parts of the country imports are empty containers and total 21% of all import volume. Many of the empties are reefers. The inland terminal is run by the stevedore Axis, which is wholly owned by Ports of Auckland Limited. The land will always be owned by the port authority and activity subcontracted on site. In terms of land costs at inland terminals vs. port or waterfront, it costs NZ$700 per m 2 of land reclamation from dredging and NZ$1,000 per m 2 of land reclamation from infill, whereas inland the cost is $200-$250 per m2 and raw land costs NZ$70-100 per m2. 3.2 Vancouver The inland terminal in Vancouver was developed by Coast Terminals, which was a small container stuffing facility until the late 1990s. In 1997 it was asked to handle containers and a small shipper’s pool and it experienced phenomenal growth in containerized imports and a demand from the forest products industry to move away from break bulk. Coast Terminals acquired its land in Richmond in 1998. As it got into the project, it needed more capital. At the time, Coast was a contractor to the Port of Vancouver, running a CFS at Deltaport, so they were already business partners. When Coast was building the inland terminal, the Port came in as a 50:50 partner with a new company called Coast 2000. A separate but related company called Modalink was established as a real estate development entity. They negotiated land leases with the Fraser River Group and the Port of Vancouver and Coast 2000 is now a partnership with Western Stevedoring, which bought out the Vancouver Port Authority (VPA) in 2004.

From the VPA’s perspective, it needed infrastructure to make the inland terminal concept happen. For a small operator, $15M was a lot of money at the time, so the Port’s investment was most welcome. The first phase of the terminal was 12 ha, then 24 ha, and now 40 ha. It is part of a 285hectare parcel developed by Fraser River Ports on its Richmond Properties. The intention is to bring exporters and importers to this location. Hudson’s Bay Company (HBC) was just down the road and has now located on the same site. Figure 3.5: Coast 2000 Terminal, Phase I

The development of the facility was driven by the shift from break bulk and the ability to turn import equipment over to export shippers. To do this it had to become a full service container yard. The concept was to bring in an ocean container, destuff it and load it with export cargo. This eliminates empty truck moves on both the import and export side. It is are just an

export facility at the moment, but wishes to attract more importers such as HBC, and have their facilities built on site. There were traffic issues and some benefits to doing this. Vancouver has a complicated planning process with many different jurisdictions. In February 2005, the facility removed 600 truck trips from area roads. Rail service on the west coast is congested and it is difficult to divert container cars. Although an inland rail terminal is some years away, Coast 2000 is looking at having a rail facility on site or immediately adjacent. Presently there are 12 ha developed with 24,154 m² of container freight station (CFS) warehouse. Uniquely, there is a barge dock to receive forest products from up and down the coast. The container yard, now in the first phase, will have a total capacity of 28,000 TEUs. The shed has capacity for 750,000 metric tonnes of annual throughput. Land utilization is about 600 TEUs per hectare. In the overall context, the port and terminals benefit. The customer gets his container much quicker. Furthermore, as in Auckland, the trucker gets two laden moves – one import box and one export box. It used to be one import and an empty, or one empty and a full container. Although another link has been added to the chain, clients have accepted it because it actually reduces the number of moves by two. The terminal is also used as empty storage yard and for loaded imports. Large retailers use it for pre-buy for sales and other promotional events. Reefers are pre-tripped by third parties and there are 18 plugs on site. Stuffing and destuffing is a big part of the operation. At this point, however, the terminal is predicated on forest products loaded into export containers. Coast Terminals is a private company, owned by two partners – Coast 2000 and Western Stevedoring. There are 8 managers and 65 labourers working at the terminal. It is subject to Teamster labour agreements. The container yard is open 07:00-16:00 and the warehouse 24 hrs. The terminal is equipped with 7 high empty toplifters; 5 high reach stackers and many clamp trucks for forest products. The maximum number of moves required to access an import container is 9. The local ratio of the cost of land at inland terminal vs. port or waterfront is $1.5M for waterfront and $0.5M for inland. 3.3 New Orleans New Orleans is a major bulk port, handling over 30 million tonnes of cargo per annum. Its container volume was 302,318 TEUs in 2002, through three terminals: APMT, P&O Ports and CeresGlobal. New Orleans enjoys the benefit of having six railways serving the port and region: CN, CSX, KCS, BNSF, NS and UP – all of which have their own intermodal terminals. There are no ondock rail facilities as there are in other US ports, but there is an underutilized port shuttle railway. Each railway has its own intermodal

terminal but there is no inland intermodal terminal operated by the port. Only 1-2% of New Orleans’ container cargo moves inland by rail; the rest is served by truck. Figure 3.6: New Orleans Container Terminal

The New Orleans intermodal terminal studied for this project is operated by CN. It was previously located downtown and separated from the main container terminals by about 8 miles (12.8 km). The new terminal is about 18 months old. Its construction was motivated by the desire to serve both import and domestic intermodal cargo more efficiently. The terminal is about 6 ha, with 300 TEUs of storage capacity, and it was designed to handle about 36,000 lifts per annum. According to the manager, it could actually do double this amount with the proper equipment and manning. It has been accepted by the trade because they had no choice if they wanted to continue to ship with CN. The cost, which is US$120-$150 round trip, is borne by the shipper. The cost includes the lift to rail and some storage days.

3.4 Lessons Learned There are a number of conclusions that can be drawn from the experience of ports elsewhere:  Chronic congestion is required somewhere in the existing system to make the concept of an inland terminal work. The Alameda Corridor development was driven by chronic congestion in the LA / Long Beach region, which was choking from an onslaught of imports from the Far East and a rapidly growing local market. The terminals in Auckland were developed to relieve highway congestion in the daytime.  An inland terminal appears to achieve better asset utilization for both ports and truckers. If a trucker can get four turns of his vehicle during the time that it once took him to do two, he has increased his productivity and asset utilization.

Likewise, if an empty move can become a full move, then this will improve productivity and remove vehicles from the road. Ports and terminals get better asset utilization by freeing up space devoted to storage of import or export containers.  Shippers get better and quicker access to cargo. Shippers, particularly those in Auckland, get better access to their cargo because it is shuttled to a region close to where they are located. They avoid long queues getting into container terminals and highway congestion getting to and from the terminal.  In terms of the value proposition and ‘selling’ the concept, it is best to focus on the shippers and not the traditional transport community, i.e. the shipping lines or terminal operators. The traditional transport community will tend to baulk at doing things differently, so the potential operator should focus on the main beneficiaries, including stakeholders.  It helps to have the port and other partners invest in the project. As the Vancouver Port Authority demonstrated with the Coast 2000 project, it helps to have the port authority act as a catalyst and provide both moral support and investment capital to get the project off the ground.

4.0 Vision for New Inland Terminal (NIT)
4.1 NIT Concept All truck-related activities presently carried out at HIT and at the port container terminals would be relocated to the NIT. The land at HIT would become available for other purposes and the port container terminals would no longer operate or maintain truck gate systems. Sufficient rail cars would remain captive to the inter-terminal rail shuttle service to ensure that at least 95% of import containers destined for the local market, as well as repositioned empties, could be handled directly from ship to rail. Containers targeted for full inspection would also go directly to the rail shuttle while so-called ‘door’ and ‘critical’ inspections would continue to be performed at the port. At the NIT, most import containers would be taken off the rail shuttle and stacked for pickup and delivery, while export cargo would be handled directly to rail from truck. The NIT would also act as an empty storage facility, handling empties to and from trucks and on occasion to and from rail when empties are repositioned by shipping lines. Domestic intermodal freight would be handled from rail to chassis and directly from truck to rail. The NIT would rely primarily on reach stackers for container and trailer handling. These machines are versatile and can be dispatched quickly to any area of the terminal. The NIT design would provide improved truck turnaround times, with a service standard of 30 minutes per truck compared to approximately 45 minutes at present. The study initially focussed on a NIT designed to handle present (2004) volumes as Phase I, with provision for projected growth over the next 20 years (up to 1M TEUs). It soon became evident that this option was not economically viable until the port begins to reach its capacity. As the first phase of construction would likely occur when the port is handling 900,000 TEUs, Phase II was sized to handle 1.5M TEUs of port capacity, based on the existing mix of business. 4.2 NIT Capacity A NIT designed to handle all the trucking volume from both ocean carriers and CN could expect to handle the same 343 truck calls per day, although there could be some synergies with HIT. In particular, there would be an increase in the percentage of balanced truck moves, as all intermodal containers would be available at the same location. About 212,000 one-way handlings would need to occur at the NIT, based on 2004 actual volumes of ocean freight and domestic intermodal freight. On average, an estimated 413 full ocean import containers would be stored at the NIT, awaiting pickup and delivery, based on a dwell time of three working days. A NIT would also need room to accommodate an average of 881 empty containers, the estimated number of active empty containers based on a 10-working day dwell time, and 68 domestic containers on chassis, based on an average 2-day dwell time.

4.3 NIT Operation The NIT would provide the trucking interface for all intermodal cargo presently handled at the existing port and rail terminals in Halifax. Intermodal trucks would be kept off city streets except for local deliveries and emergencies. Truckers and shippers would benefit from longer hours of operation and quicker turnaround times at NIT. CN’s HIT activities would be moved to NIT, and the existing port terminals would recoup land presently used for truck marshalling, gate operations, empty container storage, container repair, etc. As all trucks would call at the NIT, the opportunities for balancing loads would improve, although the present container per truck ratio is very good, at 1:9 for all terminals. That is, over 90% of all trucks exchange containers, as opposed to picking up or dropping off a single container. The NIT operating company should be a separate company or profit centre with its own management, billing and administrative functions. The following is a typical organizational chart for a small terminal operating company:

It is desirable that the shuttle operator (likely CN) have an equity investment in the NIT to ensure that the objectives of the shuttle operator are aligned with those of the NIT. Scheduling and IT systems need to properly mesh and close day-to-day communications will be essential to ensure service objectives are met. The terminal itself would be a secure bonded facility and the yard layout would incorporate a truck marshalling area, a gate building, pad tracks and various container storage areas. The terminal could be open 24 hours/day 7 days/week and handle trucks at any time, although it is likely that the terminal would be shut down for certain periods throughout the week if the volume of activity does not warrant keeping it open.

Automated scheduling would be implemented to keep the queuing of trucks to a minimum and to ensure truck turnarounds meet expected performance levels. Trucks would enter the facility from the southwest end of the yard and the terminal would be laid out in such a way that all circulation is one way. While this may occasionally require that trucks drive further up and down the terminal, it makes traffic on the terminal much safer and allows all containers to be stacked in the right direction (doors facing the rear of the truck). See layout and cross-section sketches of Phase 1 in Section 6.1. Containers would be handled with reach stackers throughout the terminal. A total of seven units (each capable of lifting 40-tonne containers from the second row and reaching into the third row for lighter boxes) would be required at 2004 volume levels, as would two hustlers. Two sets of trailer arms would be required for handling trailers on/off rail.

Two pad tracks, spaced 190 ft (58 m) apart would allow for stacking between the tracks and easy transfer from rail to stack. These tracks would be of sufficient length 8,000 ft (2,438 m) to minimize switching requirements. A service track would be built beside the existing main line track. This track will serve as a run-around and temporary storage track. At the heart of the NIT operation is a state-of-the-art terminal management and inventory system with Differential Global Positioning System (DGPS). The terminal management system (integrated IT system) will plan every move based on all the information available to it. This information would typically include:     Container locations in 3D based on DGPS verification Equipment locations, live DGPS Number of moves required to access the container Best container to choose in the case of an empty to be picked up or a multi-container booking.

4.3.1 Process The following is a description of a typical inland terminal handling process for a truck exchanging containers on the terminal: 1. The truck arrives in the marshalling yard where the driver has access to an automated teller. The driver enters his/her container number, booking number and security code for both the container he is delivering and the one he is picking up. He/she also enters identification information such as truck number, company and driver identification. 2. If all is in order, instructions on where to drop off and pick up the container are printed by the automated teller. The driver then proceeds to a security check/inspection area where the container being delivered is inspected for damage, the container and seal numbers verified and recorded. It is at this moment that the terminal interchange receipt for the container being picked up would typically be signed. 3. The truck driver then proceeds to a defined location for drop off where he/she will meet a reach stacker that has been assigned the task of handling the container off the truck. The task is assigned to the reach stacker automatically by the terminal management system. The system communicates a work instruction to the equipment operator via an on-board interactive display. A DGPS allows the computer system to know where all the equipment is at all times and adjusts plans and work instructions as required. 4. Once unloaded, the truck proceeds to the pickup location where once more a reach stacker handles the designated container, this time onto the truck chassis. 5. The truck is then allowed to exit the facility after a simple verification of the container number, as the paperwork has already been completed. Truck turnaround would be calculated from the time the driver has communicated all the pertinent information to the automatic teller, until the time the truck exits the gate. One of the characteristics of a reach stacker is that it must shift containers to another row when digging. The DGPS features on the machines will allow the terminal management system to both verify that the instruction was properly executed and also keep track, in real time, of the 3D locations of any box shifted. Containers would be laid out in a 1-2-3-3-2-1 pattern if access is available from both sides of the stack and in a 1-2-3 pattern if access is limited to one side only. This stacking pattern uses two-thirds of the 3-high stacking capacity of the pile and allows containers to be available on a random selection basis as the second move (on average), using a reach stacker. Empty containers would be mixed in with full containers in the previously mentioned piles. However, any high-volume or slow-moving empties would be block stowed at least four high. Wheeled storage space is provided for trailers and pre-loaded chassis. Over-width and over-height containers would also be pre-loaded onto chassis for temporary storage on the terminal although every effort should be made to have this type of container removed from the facility as soon as possible.

A maintenance facility with two indoor bays for servicing the reach stackers and other vehicles would be built. All vehicles would be serviced according to a planned maintenance schedule. Mechanics would be on site whenever more than three machines are working. Ideally all the office and maintenance functions could be accommodated within a single structure.

5.0 NIT SITE SELECTION
5.1 Methodology In order to determine the best site, a 35-parameter site characteristics model was employed. As shown in Figure 5.1, the ideal requirements for NIT are described for the ‘perfect’ site, which is usually unobtainable. These site parameters are critical to the terminal requirements and are therefore classified as NOGO factors, while others are a matter of relative cost to other sites. NOGO factors are shown in red in Figure 5.1. Figure 5.1
SITE CHARACTERISTICS Property Size (acres) Minimum Width (ft) Minimum Length (ft) Expansion (acres) for adjacent development Zoning Non-residential Security Ranking (1-10) 10 is the best Major Structure Relocation Required Major Demolition Required Acquisition Land Value Estimated Expropriation Costs Assembly Costs (# parcels) Environment al Condition of Site Contamination Eco-sensitive Socio/Economic Compatibility Neighbours 300-m setback available Operating Hours Restrictions Major Local Opposition Likely Job Impact Planning Issues Topography Railway Level Natural Physical Impediments Major Physical Impediment 1 Major Physical Impediment 2 Other Physical Impediments Geotechnical acceptable Access Trucking New Highway Interchange Required Local Access Road Reasonable Rail Major Structures Required Right of Way Reasonable Terminal Configuration Utilities Communication/Electrical NIT Ideal/Min 60 375 7000 100 Yes 10 No No 0 0 0 No No

While the exact variables change from project to project, the key parameters are listed below to compile a complete description of site characteristics. 5.2 Description of Characteristics 5.2.1 Property The size and shape of properties is a key characteristic to protect the long-term plans for terminal growth. This basic planning is essential when developing new terminal sites. While variances in the size and shape can be acceptable in some circumstances, given the number of ‘greenfield’ sites under consideration in this study, particular attention was devoted to ensure only those sites that met the minimum site size were selected. The zoning of a particular site is one issue which may shortcut much local opposition and therefore reduce the costs to overcome these objections. Under federal regulation, railway terminals do not have to be rezoned from agricultural, and many existing terminals across the country are still zoned agricultural. However, surrounding development of the proposed 100 acres (40 ha) would require rezoning at some time. Many of the details associated with zoning are dealt with in the Socio/Economic Planning sections on pp. 26, 37 and 45. Security is a relative site characteristic and is subjectively ranked 1-10. The ranking is based on the type of neighbourhood, and whether natural barriers to intrusion exist, such as lakes, highways, etc. 5.2.2 Acquisition Land Value is a relative cost between sites. The decision to expropriate is based on the relative cost as compared to negotiated price and, more importantly, time. The city and other levels of government have the right to expropriate where necessary, but only after due consideration to political process. This can represent a significant cost in dollars and time. In situations where many pieces of property have to be dealt with, expropriation is more likely to be required. Assembly Costs can also be significant where a large number of parcels are to be purchased without expropriation, requiring coordination of agents and lawyers and lengthy negotiations. In order to capture all relevant acquisition costs, various compensable heads of claim have been adopted which are contained in the Nova Scotia Expropriation Act, which are:

a) The ‘Market Value’ of the property, which is defined as: ‘The amount that would have been paid for the interest if, at the time of its taking, it had been sold in the open market by a willing seller to a willing buyer.’ b) Injurious Affection has two components. First, the reduction in value caused to the remaining land of a partially dispossessed owner, and second, such ‘personal and business damages’ which result from the taking. c) Disturbance damages, which typically include the costs, expenses and losses in moving to other premises. If they cannot practically be estimated or determined, an allowance not exceeding 15% of Market Value can be made. d) Special Economic Advantage is a term which captures value-to-the-owner incidental to the use or occupation of the land. e) Costs, including the legal, appraisal and other costs necessarily incurred by the owner for the purpose of asserting a claim for compensation, are reimbursable. 5.2.3 Environmental Condition of Site The environmental condition of the site is not to be confused with environmental impact and mitigation plans for the intended use of property as an intermodal terminal. This part of the evaluation strictly involves site environmental issues involving two basic physical conditions: 1) Existing environmental contamination of the property based on former use can add significant cost. Since most intermodal terminals provide a hard seal above subgrade, they can be very effective in reducing serious leaching where difficult contamination has occurred. 2) Eco-sensitivity is the identification of rare species, habitat and a wide range of investigations of the site, including archaeological material. Other environmental evaluations also involve looking at neighbourhood compatibility issues covered in the Socio/Economic Planning section below. 5.2.4 Environmental Impacts of Project The project team completed a screening level assessment of environmental considerations for each option based on existing data, study team knowledge and limited on-site review. This screening focused on the biophysical components and the potential environmental impacts of past and current land uses, to identify environmental constraints or issues of concern to be evaluated as part of the overall selection process. In addition, the project team estimated the greenhouse gas implications (GHGs) associated with each option. 5.2.4a) Biophysical and Cultural Resources Environmental and cultural resource constraints were determined in part through overlaying Nova Scotia Department of Natural Resources (NSDNR) GIS data for

significant wildlife habitats, wetlands and land uses. Significant wildlife habitats were confirmed through discussions with NSDNR staff. 5.2.4b) Land Use Impacts To identify potential land use impacts, the project team generally followed the protocols for conducting a Phase I environmental site assessment. This consisted of a review of available records, site visits and interviews with individuals knowledgeable about the sites. The records review consisted of requesting and reviewing information available from the Client and government, public and other agencies or parties. Information was reviewed from the following sources: Nova Scotia Department of Environment and Labour's Environmental Registry. Halifax Regional Municipality. Service Nova Scotia (aerial photographs). Government databases and mapping. Topographic mapping, geological and hydro-geological reports and maps available to the study team were also consulted to obtain a general understanding of the regional hydro-geological setting. The site visit was limited to visual observations made from accessible public areas as access to private properties was not available. Activities conducted during the site visit included:  observation of buildings, infrastructure and surrounding land at the sites (to the extent possible); and  observation of the properties adjacent to the sites (to the extent possible) to assess use, as could be viewed from public lands. The interview portion of the review consisted of requesting information from available person(s) thought to be most knowledgeable of the history and operations of the sites and adjacent lands. Interviews were conducted with these persons to obtain information relevant to the environmental condition of the sites. 5.2.4c) Greenhouse Gases In order to estimate greenhouse gas (GHG) emissions associated with the options, the project team compared each option using emissions values for various transport modes published by the Organisation for Economic Co-operation and Development (OECD). 5.3 Socio/Economic Impacts 5.3.1 Compatibility The nature of a potential terminal site’s neighbours can have a significant impact on the likelihood of a terminal site being politically acceptable. Residential neighbourhoods are

generally not viewed as very compatible with intermodal terminal operations, and are to be avoided. The availability of sufficient buffer land surrounding the proposed site is important in assessing mitigation requirements and estimating ultimate costs. The railways have a standard 300-m setback requirement for new terminal facilities that has been deemed appropriate by environmental regulators. Superimposing this setback over a proposed site provides an idea of the number of residents who may be have to be compensated in any terminal development. Mitigation may be enough in some cases, with such additions as earth berms to reduce noise, or directional overhead lighting instead of floodlights. In other cases, properties may have to be bought and neighbours relocated. In certain locales there may be hours of operation limits placed on a terminal by local bylaws, particularly for noise. This might include restrictions to truck or rail activities, or both, and needs to be examined particularly where plans call for an existing site to be dramatically expanded. Opposition is almost always present with new terminal development, owing to a change in land use. However, major local opposition needs to be anticipated as part of the planning process and the estimated costs evaluated prior to recommending a site. The opposition can range from a nuisance factor to a significant delay of projects for months or even years. The amount of opposition is usually directly proportional to the number of residents located nearby. Since political opposition tends to require organization, the wealthier the community, the more effective opposition tends to be. Key to the success of the terminal acceptance is the political support received by the proponents. While it is not necessary from a strict railway (federal regulation) viewpoint, it is important that local planners are able to accommodate terminal plans, particularly if the surrounding lands are to be developed for related ancillary business. The likely job impact can play a significant role in gaining community support. Estimating the overall local impact on jobs and the economy is important, particularly where there is more than one potential site available, and where employment levels vary. Planning issues deal with governance, existing official plans and evaluating the necessary steps and costs in gaining local community support. 5.4 Topography 5.4.1 Railway Level
Mainline on grade

Intermodal terminals are designed to Terminal on the Level be flat to avoid the necessity of securing railcars from rolling while left on an unload/load track. In this case the requirements are for at least 4,000 ft (1,219 m) at 0.045% grade for Phase I and 65,000 ft (19,812 m) for Phase II. In areas where railway lines are on a grade, cut and fill can provide access if there is sufficient length to allow the terminal to connect back with the mainline. This requirement eliminates many potential sites because they are too expensive to develop.

5.4.2 Natural Physical Impediments These include significant barriers such as mountains, lakes and major highways, which all add to the cost of terminal site construction, or are found to be cost prohibitive. 5.4.3 Geotechnical Acceptability Local ground conditions are important for estimating overall costs. The operations of an intermodal terminal require the operation of relatively heavy operating equipment and therefore considerable subgrade preparation is required. In rare cases, the conditions may require treatment at an unacceptably high cost. 5.5 Access 5.5.1 Truck Access Since trucks play an integral part in the operation of intermodal terminals, the ability to access 100-series type highways is essential. In some cases, new connectors are required at a significant cost. 5.5.2 Rail Access The largest expense, besides the distance between the mainline and the terminal, occurs where major structures are required to be built, for instance to cross major highways, rivers or other physical obstacles. In addition, the access line or right of way requires an evaluation of those most restrictive railway engineering issues, curvature and grade. These two elements render many proposed sites impractical to access by rail. 5.5.3 Terminal Configuration This concept deals with the rail access to the terminal for purposes of designing an operation. There are three basic types of inland terminal access: 5.5.3a) Loop This permits trains to loop around through a terminal and exit the way they came in. Unload/load pad tracks are double-ended (that is, access is permitted at both ends of the terminal). This provides ultimate flexibility because it allows trains to arrive from either side of the load/unload pads and then leave in either direction at the connection with the mainline. It may also solve mainline grade issues.

5.5.3b) Thru This is second best in flexibility and permits access to both ends, but the terminal is parallel with the mainline track, permitting trains moving in either direction to continue through the terminal. The advantage of this layout is that it typically requires less acreage than the loop design. 5.5.3c) Point (or Stub) This is a terminal which is dead-ended. Pad tracks may be stub (dead-ended) or not, but there is no running of trains through the terminal complex. This is used most often where there is no physical room parallel to the mainline or where site property is situated perpendicular to the mainline and of limited size. Operating costs are generally highest with this configuration.
Terminal Complex

Terminal Complex

Mainline

5.6 Utilities The availability of utilities at the site such as communication/electrical, water, gas and sewerage will affect the capital costs and, potentially, the operating costs of the terminal. For an intermodal terminal, communication/electrical is essential. Water, gas and sewerage can be dealt with as ongoing operating costs with local delivery. 5.7 Location This is one of the key elements of site selection. The operating impact of a location may render a ‘perfect’ site unsuitable for the project. It is not unusual to find a ‘perfect’ green site for terminal construction and operating purposes, except its location is too far from a proposed customer’s base. 5.7.1 Trucking Distance to Customer Epicentre This is an estimate used in determining the relative overall cost effectiveness of a terminal. Measured by available highway routes, it is possible that a terminal site that is more expensive to construct is better from the overall issue of truck transportation costs. A good example of this is the placement of Schneider Trucking terminals, which are required by corporate policy to be no more than 1 km off the major highway routes, due to their high fleet mileage costs. 5.7.2 Railway Distance to Port This evaluation is critical for the design of the NIT. The further the distance to the terminal, the higher the cost of transportation becomes. This is particularly true where the port traffic is driving the shuttle train service. Section 7.0 deals with the shuttle train in detail.

5.7.3 Wind Wind conditions may have significant operating consequences for the terminal, particularly where empty containers are stored. Where no natural cover or protection exists from winds, limits on container pile heights and/or stacking configurations may be imposed, requiring more acreage for the same number of containers. 5.8 Site Selection Findings Seven potential sites were examined and are shown on the map in Figure 5.2: 1. HIT (Richmond Terminal) 2. Rockingham 3. Rocky Lake 4. Oakfield 5. Lantz 6. Milford Station 7. Debert

The ideal and/or minimum NIT size requirements were calculated and are shown under ‘Property’ in Figure 5.1. These minimums were derived by taking the predicted future volumes of NIT and developing a terminal design based on best operating practices. These practices include minimizing all distances involving both the movement and the handling of containers, cranes, operating trains and trucks, in order to keep operating costs low. In addition to the site characteristics, the guiding principles set by the steering committee were added to the site evaluation process. NOGO factors were sought to reduce the number of initial sites. These were found at four sites, which rendered them inappropriate for consideration as indicated in indicated in Figure 5.3. 5.8.1 Eliminated Sites Both HIT and Rockingham were eliminated due to their inadequate size and major physical impediments to expansion. HIT is also located in the middle of a fairly well developed industrial and residential area, where expansion would be difficult. Rockingham requires a large amount of fill be placed in Bedford Basin and there are serious residential concerns in terms of expansion. Lack of sufficient property, and the inability to achieve rail access due to heavy grades, eliminated the Oakfield location from further investigation. Debert was acceptable on all counts but was a ‘perfect site’ in the wrong location, given the long distance from the Port of Halifax. It was dropped from consideration based on estimates for train shuttle and trucking costs. Figure 5.3: Sites Considered
Summary Sites considered Site H.I.T. Rockingham Rocky Lake Oakfield Lantz Milford Station Debert Legend NO GO Issue Issues No Issue Guiding Principles Size No Insufficient No Expensive fill Yes More Quarrying Yes Insufficient Yes Marginal length Yes Sufficient Yes Ample Expansion Major Cost Major Cost Nearby Insufficient Nearby Nearby Good Topography Good Good Good Unacceptable Flood plane Acceptable Good Compatible Neighbours Yes Mitigation Mostly Mitgation Mitgation Mostly Yes Shuttle Distance OK OK OK Fair Marginal Marginal Too Far

The remaining three sites did not have any ‘NOGO factors’. However, the Lantz site was adjacent to a better site at Milford Station, and for mainly topographical reasons, was therefore eliminated from further evaluation. This left two sites for considerationg – Milford Station and Rocky Lake. A brief description of issues and comments follow for each. A summary of site characteristics of each is provided in Figure 5.14.

5.9 Milford Station Site This site consists of rolling farm land, with glacial till deposits running as high as 45m above the Shubenacadie River. The CN mainline follows the river valley. The proposed site is shown in Figure 5.4. A directory with additional photos can be found in Appendix D. This site is situated on the east side of the old Highway 2 in Milford Station and includes land lying between the road and the Shubenacadie River. Much of the land is farmland with three operating farms and 16 homes along the road. The site also encompasses the entrance to the National Gypsum quarry and includes other landholdings of National Gypsum.

Figure 5.4: Milford rolling hills

5.9.1 Property Zoning is acceptable for a rail terminal but not for additional development. Zoning in the rural use designation is based on existing land use, so the AR zone corresponds to existing farms, and the R4 to mostly forested land. The plan would be to minimize the impact on local residences by relocating the mainline to the east, away from residences on Highway 2. This would lessen the number of houses located within the 300-m setback. There is sufficient room to provide 40 ha of expansion of the terminal, on top of the 24-ha Phase I requirement. In addition, there are at least another 178 ha available within the 300-m setback that could be used for ancillary business development. The existing rail spur to National Gypsum would be relocated at the new mainline, shortening its length overall, a change which presents no operational issues. Additional property for expansion is available, although the elevations would vary depending upon the amount of cut, particularly if property is developed between the terminal and the river.

5.9.2 Municipal Plan Review The East Hants Plan dates from 2000. Zoning for the study area includes R4 (Rural Use) and AR (Agricultural Reserve), in the Rural Use Designation, which is intended to “protect and enhance the rural landscape by permitting development compatible with the rural environment” (MPS 6-2). The Provincial Statement of Interest also suggests that municipalities give priority to agricultural uses (MPS 7-2). There is a swath of land along the Shubenacadie River that is zoned Floodplain, however the proposed site is set back far enough from the river that this would not be a constraint. Permitted uses within the R4 zoning (LUB 7.2.1) include dwellings, structures associated with agricultural uses, agricultural uses, forestry, local commercial and public open space. There is no as-of-right provision for industrial uses. The more restrictive AR zone (LUB 7.3.1) does not permit dwellings and commercial operations, and also does not provide for industrial uses. R4 zones may only be rezoned to other residential uses (MPS 1-11); there is no rezoning permitted in the AR zone. However, C5 (Industrial Commercial) uses are permitted in the R4 zone by development agreement. Industrial Commercial permitted uses include manufacturing and industrial uses. MPS 6-2 contains applicable guidelines for managing development that is compatible with the surrounding rural environment. Any new industrial use in this area would have to conform to these guidelines. The scale of the proposed inland container terminal development, and its possible incompatibility with the surrounding rural and residential uses, would be considered and may be an

impediment for a change of use. The adjacent gypsum quarry activities (actually located in HRM) would support an application for industrial use. In the AR zone, non-agricultural uses are permitted by development agreement (LUB 7.3.10), pursuant to an agricultural impact study as outlined in the MPS (MPS15-62). This study would outline soil capability for agriculture, and examine the agricultural impact on adjacent farms, the farm community and the East Hants land base. Existing adjacent non-agricultural uses such as the gypsum quarry, and the presence of poorer soils in the area would help to support such an application for non-agricultural use. In summary, there is no as-of-right provision for use as an inland container terminal. The portion of the study area zoned R4 (the central portion along Highway 2) may be easier, in terms of zoning, to develop for this use. Its location along the highway and rail line is conducive for this development. The northern portion and areas closest to the quarry are currently zoned AR. 5.9.3 Acquisition The conventional definition of market value contemplates a sale between a willing seller and a willing buyer. The Milford Station site comprises 22 different landowners with properties ranging from single-family homes to operating farms. Many of these owners might be reluctant sellers resulting in the possible expropriation of some or all of the interests. This in turn gives rise to legitimate compensation claims for business losses, relocation costs and other monetary losses, all of which will form part of the total site acquisition costs. In terms of the compensation to be paid to acquire individual properties, the operating farms will generate business loss claims under the heading of “Injurious Affection” and some or all of the homes will generate relocation costs under the heading of “Disturbance”. There is also a provision in the Expropriation Act to compensate dispossessed homeowners sufficiently to “put the owner in a position to acquire by purchase or construction a home reasonably equivalent to that which was expropriated”; the so-called ‘home-for-a-home’ provision. This usually applies when homes have a particularly low market value. i) Land Base Required The total land base for the terminal, including sufficient land for future service providers, is estimated to be approximately 600 acres (243 ha) as depicted on the site plan. This includes property falling within the 1,000-ft (300-m) setback but does not include any properties on the west side of Highway 2 or on the east side of the Shubenacadie River. ii) Buildings and Site Improvements Most of the properties within the terminal site are improved, with buildings ranging from modest single-family homes to operating farms. All buildings have been documented in terms of their apparent use and scale but they have not been inspected and therefore information on building sizes, physical condition etc. has not been collected at this level of study. For valuation purposes it is assumed that the

individual property assessments on the Assessment Roll include all buildings and improvements. iii) Restrictive Covenants, Easements, etc. Any encumbrances that might be registered against the individual properties have not been investigated since it is beyond the scope of the report. All properties have been valued free and clear of any encumbrances. The properties that together make up the terminal site are currently zoned (by land area) as follows:1     45% AR (Agricultural Reserve Zone) 45% R4 (Rural Use Zone). 10% HF/MF (Floodplain Zone). Less than 1% C2 (Highway Commercial Zone)

iv) Prior Sales and Marketing History The investigation into prior sales activity was restricted to research of MLS (Multiple Listing Service) data and was incorporated into the valuation exercise according to its relevance. Some of the properties, however, may have been listed for sale or sold within the past three years without discovery. v) Valuation In conclusion, no environmental contamination was uncovered in this exercise. However, there have been no specific investigations in this regard. The sites have been valued on the assumption that they are environmentally ‘clean’. A schedule summarizing the market value and other compensable heads of damage is included in the Appendix. The opinion of probable acquisition cost for the Milford Station site, expressed as of 1 May 2005, is in the range of $5.1M–$6.1M. 5.9.4 Environmental Impact Consideration would have to be given to the protection of the Shubenacadie River as a water resource (MPS 8-3). The site is located in an area of relatively thick overburden consisting of moderately stony clay loam till which is considered highly erodible. This till is underlain by Windsor Group formation rocks consisting of gypsum, limestone, shale, siltstone and sandstone. The nearby gypsum mine suggests that gypsum is predominant in this area. Areas in the province where gypsum is close to surface are noteworthy due to the development of sinkholes that can undermine surface structures. It is not known whether sink holes are present on the proposed site. There is also a potential of at-risk species in the proposed project area due to the unique geology of the area. Based on an air photo review, the history of the project site can be summarized as follows:
1

The zoning designations of individual properties are on file with Turner, Drake and Partners.

 1938–2003: The proposed site is dominated by farmland, residences and outbuildings.  1954: Gypsum quarry and associated structures shown to the east of the study area, east of the Schubenacadie River. An access road and railway line, which branches off the mainline to the quarry, are visible in the central section of the study area.  1966: A bulk fuel storage plant is visible in 1966 photos (this has since been decommissioned). Some growth in residential/farm development is evident.  1983: Additional above-ground petroleum storage tanks are visible at the bulk fuel storage facility.  2003: A large tank is under construction at the north end of the site. Contents unknown. The proposed site (1 on Figure 5.6) is considered good habitat for several at-risk species, including Inner Bay of Fundy Salmon (federally protected), Striped Bass, Gaspereau, and Atlantic Sturgeon. Figure 5.6: Milford Station Environmental Issues

NSDNR has a mapped wetland (3) adjacent to the access road to the gypsum quarry. As with a wetland noted at Rocky Lake (below), compensation may be required. NSDNR has also mapped a habitat of concern at the north end of the site (4) related to floodplain habitat. Although not confirmed by site-specific investigations, there is potential wood turtle habitat in the project area.

Records from the Municipality of East Hants show that properties in the study area are serviced by wells and septic tanks. The Municipality noted that a burial area for cattle is located north of the access road to the quarry. Provincial records only indicated a former bulk fuel plant. Where the proposed project will result in demolition of structures, further assessments will need to be carried out to determine the potential for asbestos, PCBs, lead, ozonedepleting substances, mercury and urea formaldehyde insulation due to the age of several structures. In addition, petroleum storage tanks were observed adjacent to several structures along Highway 2 and the former Imperial Oil Bulk Plant is located within the study area. Further assessment would be required to determine the presence of petroleum hydrocarbons. Pesticides and/or herbicides may have been applied and/or stored in or adjacent to the study area. Further assessment is required to determine the presence of these materials in the study area. 5.9.5 Socio/Economic Impacts Milford Station is a compatible location with the local community planners looking favourably upon the project from a potential job opportunities perspective. On the other hand, due the agricultural context of the site and proximity of some homes, some local opposition is to be expected. Typical mitigation measures including noise buffers and light restrictions would be required. Significant available land for adjacent development of related industries and a lower tax base in Hants County than HRM should attract businesses that would benefit from significant community support. In identifying locations for NIT outside HRM, the Hants Regional Development Agency had suggested a terminal location adjacent to the Shaw kitty litter manufacturing plant in Milford Station. Although the consultants reviewed this site, it was dismissed because of the preponderance of single-family homes in the area and its location on the floodplain of the Shubenacadie River. However, as the area offered a number of benefits for NIT, an alternative site could be located next to the nearby National Gypsum Quarry.
Figure 5.8: Highway 2 with Typical Residences

5.9.6 Planning Issues i) Compatibility The property configuration includes a triangle of agricultural and forested land that lies between the Shubenacadie River and the CN rail line. A Nova Scotia Power line runs north-south through the site. Surrounding areas support a mix of wellestablished farms, modest single-family dwellings, and the National Gypsum Milford Quarry. Most of the adjacent residential development lies along Highway 2, the main northsouth secondary road in the area, which links the East Hants communities of Lantz, Milford and Shubenacadie. The highway runs parallel to the rail line, on the eastern boundary of the study area. Residential ribbon development here consists of modest single-family dwellings, with some small home businesses. These dwellings appear to be in a range of ages: farmhouses likely over 50 years, small bungalows aged 20– 30 years, some newer one-storey dwellings and mobile homes. There are a few small homes in one small subdivision on a short cul-de-sac off the highway to the north of the area. Agricultural land and forest lie behind the ribbon development and west to Highway 102. A few roads run off the highway to operations such as dairy farms and horse stables. The area to the east of the study area (within HRM boundaries) is agricultural, gypsum quarry land, and forested land. The quarry’s processing plant lies across the Shubenacadie River from the study site. North of the processing operation, a ridge overlooks the study area boundary, topped by a road and several dairy farms. A newer subdivision on Robert Scott Drive, south of the study area, consists of modest single-family dwellings, from new to about 25 years old. This area appears to be similar to other residential developments in Lantz, just to the south. The greatest opposition is anticipated from residents in the northern part of Lantz (Robert Scott Drive). Other than this area, there is not a lot of high-end Figure 5.9: Robert Scott Drive Subdivision residential development adjacent to the site. Some residents may look favourably on the terminal for economic opportunities. Residents are used to the current noise levels on the CN mainline. Moving the rail line further east may be a benefit in terms of noise levels. Other than the gypsum quarry, industrial activity near the site consists of a small plant in Milford, at the northern tip of the area, where the river, rail and road converge. Shaw Resources manufactures and packages absorbent clay for kitty litter at the plant. Surrounding the plant, the residential development in Milford is fairly dense.

ii) Discussions with East Hants Planners In order to assess the potential of the site, the consultants met with planners from the Municipality of East Hants. This section summarizes their comments on the site. The first comment was on the appropriateness of the proposed facility. According to municipal staff, the proposed NIT is a priority project both for the Hants Regional Development Authority and East Hants Council. The Municipality will fully support a future application to construct NIT in this location.

Figure 5.10: Farm Property between CN mainline and Shubenacadie River As mentioned previously, the planners felt that municipal council would look very favourably on the inland transportation terminal as a singular economic development opportunity. Loss of agricultural land, including only two operating farms would be a minor issue; its impact on adjacent residents would be the larger concern. Since the MPS was not clear on how the inland transportation terminal use could be accommodated within the existing plan, the consensus was that the best option would be to apply for an MPS amendment to put a new designation in place to allow for the use under development agreement. The plan amendment process, which would take four to six months, requires the following: The developer makes a formal application with a site plan, project description, and related studies, including agricultural impact, transportation, noise and lighting impact, and possibly air quality. The proposal should also include some description of how the project would be phased in, and the scope of adjacent commercial/industrial development anticipated as a result of the terminal’s presence. To facilitate the process, the MPS amendment and a development agreement could be crafted simultaneously (although the development agreement would have to wait for signing until the MPS was approved.) All owners within 300 m of the site would receive a notifying letter, a staff report and a questionnaire to gather opinion on whether landowners are in favour of the proposed development. HRM would also be advised. At least one public information meeting would take place. A public hearing would be held to present both the MPS amendment and the development agreement. There are no appeals for MPS amendments. The development agreement could only be appealed in the case of inconsistency with the plan; this would be very unlikely.

Since the Shubenacadie Canal Commission is planning to develop a trail along the river, it would be asked to comment on any proposed development. iii) Topography The CN mainline drops 10 m in 2,000 m over the length of the site which means the terminal will require significant fill on the north end and cut on the south end. Given the glacial till nature of the area this should not pose major construction issues. At least three streams cross the study area and drain into the Shubenacadie River. These are not seen as significant problems. The proposed site is not in the designated floodplain area (MF zoning) of the Shubenacadie River. A further consideration noted in the MPS for the Milford area is Karst topography, which poses a risk of subsidence due to sinkholes (MPS 8-4). This may impact on site development, but currently there is no detailed mapping for this particular site. iv) Road Access Highway 2 provides good local road access adjacent to the site. There are several locations along the highway where an appropriate truck entrance could be made onto the site. Highway 2, however is not well-suited for truck traffic, with numerous residences located along its length, although it is currently a truck route. The two main areas of concern in getting the development approved locally would be dealing with the volume of truck traffic created by the terminal and its impact on neighbouring residents. To avoid either the village of Shubenacadie to the north or Milford to the south, a new connector to Highway 102 could be constructed due west of the site, keeping in mind the truck traffic to and from this terminal would not provide the normal volume of traffic to warrant an interchange. An interchange on Highway 102 close to the site would be preferred over routing trucks along Highway 2 past residential developments in Lantz. The Department of Transportation and Public Works is currently looking at constructing an interchange in Lantz, south of the proposed site. They might be willing to consider moving the interchange north or adding another interchange to service the Milford site. v) Utilities Electricity is readily available. Municipal drinking water is drawn out of the river upstream of the site. Water and sewer servicing in the Enfield-Elmsdale-Lantz district stops at Robert Scott Drive. Therefore, wells and septic containment would be used at the terminal. 5.10 Rocky Lake Site The study site is located on Rocky Lake Drive, a secondary road that connects Bedford, Lower Sackville and Waverley, and runs along the southeast shore of Rocky Lake. CN currently serves an industrial siding adjacent to the entrance to the Municipal Group Quarry. This area of the yard would be expanded to the north.

5.10.1 Property Zoning is compatible with a quarry immediately to the east of the site. The Industrial areas of Bedford as well as Burnside Industrial Park are nearby. There is good separation between the residential sections to the west side of the lake. No residents live within the 300-m setback. The study site, most of the adjacent quarry lands, and the community of Lakeview lie in the Shubenacadie Lakes plan area of HRM (plan date 1988). The Bedford Industrial Park and some of the quarry lands lie in the former Town of Bedford plan area. There is sufficient space for 24 ha with some excavation of rock. In addition there is another 40 ha of expansion room with additional levelling of rock hillside. Furthermore, there is at least another 55 ha of adjacent property that lie within the 300-m setback and which could be used for ancillary business development, although it is unclear how much would be required with Bedford and Burnside industrial parks nearby. The unserviced study site is currently zoned I-3 (light industrial), which permits, among other uses, warehousing, service industries, light manufacturing, assembly or processing, and wholesale operations. There are restrictions within the I-3 zone on open storage and landscaping, in order to ensure compatibility with surrounding uses.
Figure 5.11: Rocky Lake Site

5.10.2 Acquisition This site forms part of the quarry owned and operated by Municipal Enterprises Ltd. and Sovereign Resources Inc., a related company. There could also be a new rail line constructed around the northern shoreline of Rocky Lake over lands owned by L. Archibald Holdings Ltd. i) Total Land Area Required Terminal Site: Approximately 120 ha including the 300-m setback. Terminal Rail Line: Corridor approximately 1,800 m x estimated width of 30 m = 6 ha (rounded). However, acquisition of the rail line will sever the rest of the land from Rocky Lake, thereby diminishing its value. This represents “Injurious Affection” in compensation terms. ii) Building and Site Improvements Terminal Site: There are two existing commercial/industrial enterprises on the Terminal Site. First, the Ambassador RV facility, which is a seasonal operation, comprising a two-storey wood frame commercial structure and a service garage. Second, the Alpha Chemical facility which comprises a modern steel industrial building, a small office and rail siding. Alpha is a distributor of specialty and commodity chemicals. It is not known what, if any, lease arrangements are in place for these businesses. Terminal Rail Line: The parent parcel is used for dynamite storage and it is understood there is a storage building on site, though not on the proposed railway alignment. However, there is an entrance gate and driveway along Rocky Lake Road which will probably have to be relocated outside the railway alignment. iii) Restrictive Covenants, Easements, etc. All of the encumbrances which might be registered against the lands have not been investigated since it is beyond the scope of the report, but a significant Building Restriction Covenant was registered on part of the Terminal Rail Line parent parcel in March 2005 in favour of Sovereign Resources Inc. Essentially, it prohibits the owner (and its successors) from building on any of its land within 600 m of Rocky Lake Road, which includes approximately one-third of the Terminal Rail Line corridor. Current Zoning Terminal Site: I-3 (Light Industrial). Terminal Rail Line: H-1 (Hazard) iv) Prior Sales and Marketing History Sovereign Resources Inc. acquired part of its landholdings in February 2002 (including the open pit quarry on PID #40255689) and the rest in March 2005 from L. Archibald Holdings Ltd. The later sale was based on a price of $3,000 per acre. No other sales,

listings, options or other agreements on these lands within the past three years have been found. v) Valuation No evidence of environmental contamination has been uncovered; however, there has been no specific investigation in this regard. The sites have been valued on the assumption that they are environmentally ‘clean’. The opinion of acquisition cost for the Rocky Lake site, expressed as of 1 May 2005, is in the range of $1.5-$2.2M. It is anticipated that an exposure time of 12 months would be required to achieve this price if the property were put on the market for sale. 5.10.3 Environmental Impact The Rocky Lake site is located adjacent to an area of thin soils and extensive rock outcrops. Soils, where present, consist of sandy loam. Bedrock geology consists of greywacke, slate and schists of the Goldenville formation. Based on the air photo review, the history of the project site can be summarized as follows:  1931: The site was undeveloped and forested.  1967: The quarry is present near the south end of Rocky Lake and Rocky Lake industrial park has been constructed.  1982: Siding and laydown area at Rocky Lake Quarry under construction and several structures present.  1982 – 2003: Continued development of Rocky Lake Quarry and adjacent quarry as well as Lakeview residential development west of the site.

NSDNR mapping shows “Significant Wildlife Habitat” in the small pond at the south end of the proposed terminal (Figure 5.12, 1b). This has been designated due to localized waterfowl use and is not expected to deter site development. NSDNR has also mapped one wetland that lies within the footprint of the proposed terminal (3b). The significance of this wetland has not been determined and a wetland evaluation would be required to assess the full extent of mitigation required. This mitigation, in general, would consist of a form compensation for the wetland loss. At present, compensation is negotiated with NSDNR and Environment Canada on a case-by-case basis. As well there is a small pond (4) potentially within the footprint of the project. This may be considered fish habitat and further assessment would be needed to confirm its status. No at-risk species are known or documented in the immediate vicinity of the site. The proposed rail line extension around the north end of Rocky Lake will require the crossing of two small watercourses. Neither crossing presents a constraint to the project, assuming standard watercrossing measures are employed. Each will require approval from Nova Scotia Department of Environment and Labour (NSEL). A review by the Nova Scotia Museum indicates that a registered archaeological feature is located in the vicinity of the proposed Route 2 realignment. Based on current mapping for the project this feature will not likely be impacted. This would need to be confirmed during detailed design. A review of provincial and municipal records was carried out for the site. Provincial records available from NSEL include several approvals related to the operation of the Rocky Lake quarry but no records were obtained concerning the project site.

Similarly, no municipal records were on file concerning the site; however, HRM mapping shows the lands to the north of Rocky Lake (former CIL lands) as a ‘Special Area’ on the generalized future land use mapping. The land use by-law specifically identifies these lands as Hazard due to its previous use for explosives manufacturing. Further assessment would be required to delineate the extent of impacted land and the risk to the construction and operation of the proposed rail line. Given the age of some of the structures on the site, there is potential for the exposure of asbestos, PCBs, lead, ozone depleting substances, mercury and urea formaldehyde insulation if structures are to be removed. Also, petroleum hydrocarbons may have been used and stored on the site given the industrial and commercial use of the area. Sitespecific environmental assessments would be required to determine the presence of these materials. However, if these are present, they are expected to be manageable. A potential barrier to a change of use relates to water quality concerns in lake areas. Comments in the MPS regarding industrial developments in the Rocky Lake area indicate there is some concern with water quality in nearby lakes; no sewer servicing exists in this area and residential communities are nearby. The Rocky Lake watershed is also noted in the MPS as a priority area for storm drainage master planning. This stems from the historic use of the Waverley area for mining activities, and the resulting deposition of heavy metals (arsenic and mercury) in the bottom sediments of lakes in the area. Large volumes and corresponding rates of runoff, such as from large areas of pavement, may re-suspend sediments and release contaminants into the water supply. With the proximity of Rocky Lake to the study site, it is possible that environmental impact may be a factor limiting development of the site. Therefore terminal plans would require containment of water runoff prior to any discharge into the lake. It is worth noting that the Bedford MPS also makes note of restrictions on industrial development within close proximity to watercourses or water retention areas. 5.10.4 Socio/Economic i) Compatibility The surrounding land uses are heavy and light industrial, resource and residential. Rocky Lake is one of the headwater lakes in the Shubenacadie watershed, which is a water supply for many downstream communities. South and west of the site, industrial uses predominate. The Municipal Group quarries the southwest mines, and processes and loads quartzite rock for use around the province. Rocky Lake Drive already carries a large volume of dump trucks hauling rock. To the west of Rocky Lake, in the 113 acre (46 ha) Bedford Industrial Park, heavy and light industrial uses include concrete manufacturing, soil mixing and stockpiling, firewood stockpiling and some retail sales of recreational vehicles. The majority of this land has been developed, and there is not much potential for new industrial development without expanding the boundaries of the Bedford Industrial Park. CN owns most of the land in this well established, serviced industrial area. The rail line bisects Rocky Lake and runs across a causeway and along the peninsula occupied by the community of Lakeview.

The community of Lakeview lies northwest of the site, between Highway 102 and the north shore of Rocky Lake. The Lakeview Road portion of this area has been occupied since the mid-1800s, and some residences date from that period. This area of older dwellings has been infilled with modest single-family dwellings. The newer portion of Lakeview consists of a large lot subdivision, with water servicing, built in the mid-to-late 1980s. A small beach park is run by the residents’ association. In a few places, new construction is evident. Some homes, particularly on lakefront lots in this portion of Lakeview, are considerably larger than in the older portion. There are still some areas on Rocky Lake which, although zoned for residential development, have not been developed. For the most part, industrial uses on the opposite shore of the lake have not impacted on the visual character of the lake for Lakeview residents. The study site is screened from the residential area by a wooded island in Rocky Lake. However, noise from quarry activity and from the adjacent Highway 102 is apparent even to the casual visitor. On the northeast shore of the lake are forested lands used for explosives manufacturing in the late 1800s; the land is still considered hazardous. Zoning in this area prohibits any activity except explosives storage and related uses. A small quarry is located behind the site on forested land designated for resource use. ii) Planning Issues Residents’ associations in the area have had a history of opposing an expansion of industrial uses. The MPS makes note of two occasions on which residents of Waverley and Windsor Junction/Fall River have expressed concerns over quarry and industrial development. In 2004/05 L. Archibald Holdings made an application to HRM for a plan amendment to rezone the lands immediately north of the CN property from H-1 Hazardous, to R1 Single-family for the purpose of building 175 homes. A portion of this property was previously used to make nitro-glycerine for mining, and the developer proposed to fence this land off in order to ensure resident safety. Simultaneously, the Municipal Group made application to the province to extend one of their existing quarry permits to the border of the Archibald Holdings property. According to HRM planners, there was very little opposition to the plan amendment from neighbourhood groups, as most saw the new development as a way to stop the growth of the Municipal quarry in the direction of the Village of Waverley. This application for a Plan Amendment was withdrawn five minutes before the start of the HRM public hearing, when the proponent announced that a deal had been signed to sell the southern property to Municipal. L. Archibald Holdings still owns the parcel on the north side of Rocky Lake (i.e., the land the relocated rail line would cross). iii) Discussions with HRM Planners In order to assess the potential of the site, the consultants met with planners from HRM’s Central Region office.

HRM staff confirmed that all the land proposed for the NIT is currently zoned I-3, and that the existing rail activity on the CN site conformed to this zoning. As such, an expansion of the CN facility into NIT would be considered an ‘as of right’ development, therefore no planning approvals are required. They also confirmed that any levelling of the site (i.e., excavation of rock) would be considered site preparation, and not an expansion of the quarry which would necessitate a quarry permit from the province. It was recognized that any site development plan for the NIT should attempt to mitigate off-site impacts through the use of sensitive design. For example, leaving a course of rock (i.e., a 4 m barrier) towards the Lakeview neighbourhood would help stop sound transmission across Rocky Lake. HRM planners indicated that once the new HRM Regional Plan is adopted, the municipality will begin the process of revising the 23 secondary plans. As these plans will be reviewed using a watershed management approach, areas that have an existing watershed management plan in place will likely be reviewed first. As the Shubenacadie Lakes Watershed Plan (1992, Vaughan Engineering) covers Districts 14 and 17 (Waverley/Fall River), this work will form the basis for the new area plan, and this area is likely to be one of the first to be reviewed. This raises the potential for a future change in land use. However, since the development can proceed ‘as of right’, it was recommended that the proponent apply for a development permit before the start of this process, thereby ensuring the ability to develop the NIT. Although this permit is only good for a period of two years, it can be renewed before its expiration. Given the potential for area residents to argue for a change of land use around Rocky Lake during the public hearing process associated with the future plan review (i.e., re-designate the land from I-3 to R-1), it was suggested that HRM regional planners include several regional statements about the importance of good transportation/rail linkages to the future economic potential of the Port of Halifax. Providing these statements would allow HRM planners to maintain the I-3 zoning in the Rocky Lake area, as NIT would provide regional benefits to the municipality (e.g. increased port activity, decreased truck traffic on the Peninsula). iv) Topography The topography is level as it follows Rocky Lake. A large hill to the east of the lake provides a significant rock barrier for part of the length. Since the land is owned by the quarry owners, it may be possible to excavate this section to reduce the rock removal costs.

v) Access Road The site has excellent access to Highway102. With the proposed Burnside Drive extension, the site becomes very close to Burnside Industrial Park, which houses the largest group of intermodal customers in the Halifax area. Rocky Lake Road already handles numerous trucks. Traffic capacity on nearby Duke Street may become an issue as a local developer has plans to build a three-arena recreation complex as well as housing behind CP Allen High School. The proponent is currently seeking a Plan Amendment in order to allow this project to proceed. The implication for the NIT is that this development may erode the capacity of Duke Street to handle truck traffic. Should future truck traffic need to use this street to access the NIT, congestion could be a problem. Rail Three streams cut across the proposed rail route and terminal site, although none warrants major structures. The site has the ability to provide some additional potential for consolidation of rail activities in the Halifax area should CN decide to do so. A new junction could be put in at the northeast corner of Rocky Lake at the end of the proposed terminal site if CN were to reroute its mainline around the north end of Rocky Lake. This would shorten the Dartmouth Subdivision by some 2.5 miles (4 km), avoiding four existing crossings plus the residential areas of Waverley. In addition, it could render the line across Rocky Lake redundant, freeing up valuable lakefront for existing residential

5.11 Site Selection Summary The key factor is the distance from the Port of Halifax. Based on the site characteristics, Rocky Lake has the major advantage of location with reduced distance to the port and Burnside. The site selection process can be summarized as follows:

Figure 5.15: Site Selection Summary Rocky Lake Site Pro Proximity to Burnside Fits into long term area use Distance from Halifax Least operating cost Least backhaul miles No residential relocation Access to 100-series highway Opportunities to combine more Rail facilities Milford Station Site Pro Size of Property Available Construction cost may be lower

6.0 NIT Concept
6.1 Description of the Conceptual Terminal Layout i) Phase I Design The terminal is configured to follow the shoreline of Rocky Lake to take advantage of the level grade and existing quarried areas to minimize the amount of rock excavation required. An aerial view of the proposed first phase of the terminal designed to handle the local market share of 525,000 TEUs through the Port of Halifax is shown in Figure 6.1. Figure 6.1: NIT Phase I

The entrance to the terminal is located off Rocky Lake Drive, north of the CN overpass. Relocating the existing roadway to the east side of the proposed terminal takes advantage of the existing grade separation over the CN mainline at the south end of the terminal, thereby avoiding a new crossing of the CN line further to the north. A sense of the height of the rock hill that exists in this area is evident in the 5metre contour map of Figure 6.2. As can be seen, the terminal cuts into the large hillside that runs mainly parallel and to the east of Rocky Lake. This hill is cut into as much as 60 ft (20 m) above railway grade. This would normally add significant cost to the terminal construction, but based on the information received from the Municipal Group, such excavations are within the normal consumption of its quarry. Three factors will assist in offsetting the anticipated excavation costs. First, the excavation could form part of the normal material for operations. Second, the sub-

base in the area is bedrock, providing a much more stable subgrade than soil, thus reducing the amount of aggregate required. Third, any crushed stone required will be available on site, thereby reducing transportation costs. In order to reduce excavation quantities, Rocky Lake Drive could also be designed and built with a significantly more aggressive profile than the railway infrastructure, passing along the hill at a higher elevation. Furthermore, depending upon road planning initiatives in the area and the proposed connector to Burnside, Rocky Lake Drive could be relocated even further to the east or disconnected entirely. Figure 6.2

Phase I of the terminal layout includes two 4,000 foot (1,219 m) long loading/unloading tracks on either side of the container stacking area. The proposed plan and section views for Phase 1 are shown in Figure 6.4. The container stacking arrangements shown in the plan are for illustration purposes only; however, there is sufficient room to accommodate the normal peaking population of 3,302 TEUs, based on an average stack of two high for loads, and three high for empties. The sections show the stacked arrangements of a typical pile of empties placed in a stepped fashion to maintain stability of the overall piles, while loaded container piles are limited to three high. Similarly, empty container stack piles are grouped into rows of up to eight deep, while loaded containers are limited to groups of six deep. This minimizes the double handling of containers that typically results when ‘digging out’ a container ‘buried’ deep in a pile. Since the terminal is well sheltered on the east with the large hill, it is anticipated that wind would not have a significant impact and containers could be stacked as much as five high if required. The restrictions on loaded container piles are due to crane lifting capacities and the increased likelihood of requiring a dig for a specific container, as opposed to simply taking the next available empty. The number of empty stack piles will depend upon the type of empty, owner and number of containers. State-of-the-art container yard inventory tracking/logistics tools are used to minimize crane travel distance and multiple handling of containers. As part of this approach, stacks are a mixture of loaded and empty piles to gain advantage of real time inventory control. During periods of exceptional peak demands, up to 33% more loads and empties could be handled, but at higher operating costs due to more secondary container handlings. Access lanes for moving cranes from one side of the container stacks to the other (or from one track to the other) should be spaced at intervals of no more than 1,000 feet in order to minimize unnecessary crane travel. Truck movements are unidirectional along each track to allow for maximum safety with minimum roadway width.

Additional space for support tracks and/or noise berms or retention ponds is reserved between the mainline and the terminal until such time that final requirements can be ascertained. Noise mitigation requirements are not known at this time; however, several islands appear to act as natural berms for the residences to the west of Rocky Lake along most of the terminal length. The rail design also includes one service track and an escape lead track at the very north end for shuttle train power to be able to pull in and run around the terminal when necessary. As such, Phase I is a stub end terminal design. The service track is accessed from the mainline at the south end of the terminal via a crossover, allowing for access by either the shuttle trains or Train 121 which can set off arriving HIT traffic directly in the terminal. The service track also extends southward about 4,000 feet (1,219 m) from the south end of the terminal, utilizing the existing grade of the abandoned second mainline track, where it would also connect with the CN mainline. Use of this abandoned roadbed gains cost-effective trackage for additional switching capacity, which can be conducted clear of the mainline and avoid interference with other trains. At the southeast corner of the terminal complex, the existing quarried areas will be used for the truck entrance/exit area. This

includes three inbound queue lanes of five trucks each, and a single outbound lane. Each lane is equipped with a computerized gate stand for driver input and directions. Other security and identification/scanning equipment may be installed at this location as well. The gate building/administration offices, employee parking, and a small maintenance facility is in close proximity in this corner area in order to minimize utility costs and provide a common on-duty point for all terminal employees. Power outlets for grounded containers equipped with refrigeration units, and 190 parking spots for containers on chassis and empty chassis (two rows of 11 foot (3.25 m) wide parking spaces) for CN domestic service would also be located just inside the gate. The exact footprint will take advantage of existing quarried areas to reduce overall excavation. The detailed design process would take into consideration the ultimate user requirements as well as data from field investigations, such as topographic surveys and geotechnical condition surveys, hydrological analyses and environmental mitigation requirements. The final design would include grading, drainage, power,

lighting, mechanical systems plans and specifications, and pavement designs suitable to the varying loading conditions. ii) Phase II Design Phase II is essentially a longitudinal extension of Phase I, as indicated in Figure 6.5. The throughput volume requirements for Phase II is assumed to be approximately three times that of Phase I, or about 1.5M TEUs. With excavation reaching depths near 18.2 m in a few locations in Phase I, the terminal is designed to extend lengthwise with little additional width. As viewed in the contour map of Figure 6.6, the excavation still reaches depths of up to 23 m. In order to accommodate triple the volume, three 2,286 m long loading/unloading tracks are required, with an adjacent capacity for stacking the equivalent of 9,000 TEUs of containers as well as 390 containers on chassis. Representative plan and cross-section views of the expanded terminal are shown in Figure 6.7. 6.2 Construction Costs An opinion of estimate costs for Phases I and II is in Appendix B. Due to the rocky terrain, the cost to construct suitable storm water drainage and retention systems and other buried utilities may be significant. These costs may be offset by a reduced pavement cross-section requirement and the availability of crushed rock for use as aggregate. Furthermore, should the Municipal Group’s quarry plans be modified to include the excavation of the proposed terminal area, the rock removal costs would drop significantly. The overall cost of excavation of this terminal is not expected to differ from average costs of the other terminals used for the cost estimate shown in Appendix B.

6.3 Operating Costs Under the NIT scenario, HIT moves all operations to NIT, and all of the operating and handling costs at HIT are saved. At the port terminals, the handling costs involved in trucks picking up import boxes for local delivery are eliminated, as are all empty handling costs and the costs of maintaining a truck gate operation. The costs associated with the pre-tripping moves for reefers, moving of containers to/from repair areas and the occasional digging out of a particular empty container are also eliminated from the port terminal’s costs. Handling costs at NIT include handlings previously occurring at HIT: import containers into the local market, empty yard moves, reefer pre-tripping and loading local export moves directly from truck to rail car. At the port terminals it is expected that virtually all of the import containers coming off vessels would be able to go directly to a rail car to be shuttled to the NIT. The terminals in Halifax have the ability to load rail directly from ship; until recently this was the standard way of operating at both terminals. As part of the normal discharge cycle, containers are drayed to the correct rail track and directly loaded onto a railcar by a top lifter working the track, or by a rubber-tired gantry. Containers not able to go directly to a track for loading would be directed to another area of the yard for stacking. The concept of the inland terminal relies on the ability to move the import containers directly to rail both efficiently and reliably. Having a sufficient number of railcars to provide an available platform at the time the container is discharged from the vessel is critical. The estimated operating costs include a captive fleet of railcars sufficient to ensure that containers are loaded directly to rail. Generic rule of thumb handling costs per unit were used and applied to the number of handlings added or saved at each location. The difference in cost by location was further confirmed by a calculation of the typical manning and equipment requirement to operate a daily truck gate. Truck operating costs are very much a function of the geographical location of the NIT. Cargo distribution and volumes were used to calculate the change in 1,000 truck kilometres. Again, a rule of thumb rate was used to calculate savings or additional costs. In addition to the net transportation distance saved or added, the location of the terminal also had an effect on the routing of the containers. When routing changes resulted in driving on a better (faster) road, the calculated savings was based on saving 40 seconds per truck-kilometre. When the routing changes resulted in driving on inferior (slower) roads, a delay of 40 seconds per truck-kilometre was used. The net change of routing was converted into time savings or additional expense based on a cost of time for the truck and driver of $35 per hour. The calculation also considers the benefit of improved truck turnaround at the NIT. A saving of 15 minutes per truck call is used for this calculation at, again, the $35/hr cost of time and equipment. The cost of additional cars and additional switching required for the shuttle service was developed based on a ship arrival pattern that creates a peak of two times the average daily volume, one day per week. This is what would be expected from a random arrival pattern throughout the week with all major ship calls planned to start at 08:00. In addition to this switching and rail car rental lump sum, the cost differential of the rail haul itself is

6.3.1 Transition The operating savings are based on fully burdened costs, not rates. In some cases, such as the long haul trucking that is charged on the basis of distance hauled, the transition is simple and the savings can be realized immediately. In other cases, such as terminal handling, the existing terminals already have the facilities, equipment and operating systems to handle at least the present volumes and their immediate savings will only be the incremental savings of not handling certain containers. At the same time, new operations such as NIT and the shuttle service will have to charge more than just their operating costs if they are to be viable. This discrepancy is likely to represent some $50 per container moved to/from the NIT and it may be necessary to allow some time for the savings to trickle through the various rate systems by providing an initial subsidy that would disappear over a period of a few years. 6.4 Labour Implications Members of the International Longshoreman’s Association (ILA) handle all the freight arriving on ships at Halifax’s container terminals. Except for transhipments, containers are transferred from ship to an inland transportation mode or vice versa. Containers to/from the local market (the Maritimes, parts of New England and eastern Quebec) are generally trucked while containers to/from other inland destinations are railed to inland rail terminals. Members of the Canadian Auto Workers Union at HIT handle domestic containers. The concept of a new inland terminal would involve the relocation of all domestic intermodal activities to a new site and the use of this same site as a new inland rail destination for international containers. Trucks would no longer call port terminals; even the containers destined to or coming from the local market would be railed in and out of this terminal. All trucking activity would be concentrated at the new inland terminal, including the storage of empties and the handling of containers targeted for full inspection by Customs. This means that containers arriving at one of the two ocean terminals, Halterm and CeresGlobal, would be taken off the vessels, loaded directly to a rail car and shuttled to this new inland terminal. Presently, on this import cycle, locally-destined containers are taken off the vessel and stacked in the yard to be picked up by a truck. As all handlings to and from trucks would be relocated to the new inland terminal, the labour functions associated with the truck handling activities at the existing port terminals would no longer be required. It will still be necessary for the container terminals to load these containers on and off rail cars as opposed to on and off trucks. The vast majority of these local containers would be loaded directly to rail from the ships, saving the second handling to truck. The ILA has jurisdiction over any activities in the longshoring industry occurring within its geographical accreditation. This geographic accreditation covers all of the Port of Halifax and has recently been extended to include Autoport, which is situated just outside the port’s limits.

As the work performed at the inland terminal is not work in the longshoring industry, it would fall outside the present ILA jurisdiction. It is possible this jurisdiction could be expanded and the union leadership has already indicated that they are opposed to the concept of an inland terminal, as it would result in reducing the number of hours of work of their membership. It is however most likely that the labour affiliation at the NIT would be determined by the ownership of the terminal, i.e. who operates the shuttle service and who operates the terminal. For the purposes of this study, a heavy industrial labour rate of some $20-$25 per hour, plus 30% fringes was used for labour costs at the NIT. Labour at the NIT would consist primarily of equipment operations working to a schedule that would be designed around the work requirement of the terminal while providing 40 hours per week of scheduled work for the employees. Meal hours and break periods would be staggered to maintain continuous truck servicing throughout the day.

7.0 Shuttle Operations
7.1 Current Infrastructure Halifax serves as the eastern terminus for CN train operations in Canada. The route between Truro and Halifax is known as the Bedford Subdivision. The mainline is predominantly single track with sidings spaced approximately every 10 miles (16 km) to allow opposing trains to pass one another. Trains are identified by number, with odd-numbered trains operating westbound and even-numbered trains operating eastbound. Approximately 16 miles (26 km) north of the terminus in Halifax lies Windsor Junction, where the Dartmouth Subdivision joins the mainline. This subdivision serves the industrial districts in the Dartmouth area. Between Windsor Junction and Halifax (on the Bedford Figure 7.1: CN Halifax Network (Mile Points) Subdivision), over 95% of the rail traffic is container movements. This section was originally built as a two-track mainline to accommodate frequent train movements at slow speed due to the steep 3-mile long 1.5% ruling grade between Bedford and Rocky Lake. In 2003 a hurricane washed out a section of one of the two tracks near Bedford, which prompted CN to remove the second main track from mile 7.0 (km 11.2) to Windsor Junction (mi 15.8 or km 25), and rename the remaining section the Halifax Transfer Track. This section, between mi 4.5 and mi 7.0 (km 7.2 and km 11.2 km), and including Rockingham Yard, continues to provide CN with the ability to pass trains when required. The mainline officially ends at Fairview Junction (mi 5.0 or km 8), which is located at the east end of Rockingham Yard. The Deepwater Branch connects here, serving CN’s domestic intermodal terminal (HIT). The former double-track mainline continues as a single yard track through the cut toward Halifax passing the Chester Spur (mi 4.5 or km 7.24), and is designated as the HOT-Rock Connecting track. CN removed most of the

second track in the cut several years ago, leaving only the portion between miles 2.5 and 1.4 (km 4 and 2.25) to serve as a second yard track for the Halifax Ocean Terminals. The VIA station is located at mile 0.0 on the Bedford Subdivision. 7.2 Existing Train Service West of Windsor Junction, trains from both Halifax and Dartmouth sides of the Basin combine to keep this section fairly busy. At least 12 trains per day move over this section. East of Windsor Junction, on the Dartmouth Subdivision, general manifest trains 307 and 308 carry autos and other commodities. In addition, gypsum unit trains make two round trips daily between the National Gypsum dock near Burnside and the East Milford mine. These unit trains are numbered U701, U702, U703 and U704. Intermodal trains 120, 121, 148 and 149 operate on the Halifax side of the Basin. Rockingham Yard serves as the main CN switching yard for Halifax. Around-the-clock yard assignments make up outbound trains, switch inbound trains into the two port terminals, HIT, as well as other local industries. Other than train 121, all freight trains arrive and depart from Rockingham Yard. Outbound train 121 originates at HOT and operates through the cut, picking up the Ceres and HIT traffic at Rockingham each evening. Inbound Train 120 arrives each morning at Rockingham and then proceeds to take its domestic containers directly into HIT for early morning availability. VIA Trains 14 and 15 operate through the cut over the HOT-Rock Connecting Track into the VIA station (mi 0.0). Figure 7.3 is a summary of CN train operations over the Bedford Figure 7.2: Daily Train Operations Subdivision in timetable format. Note that the heaviest traffic is between Windsor Junction and Milford Station, where there are only two passing sidings (Kinsac and Oakfield). The one at Kinsac is also used as a transfer point for Dartmouth connecting traffic.

Figure 7.3: Existing Rail Schedules 7.3 Rail Shuttle Operation i) Purpose The rail shuttle has two basic purposes: a) Conveying locally-destined import containers from the two port terminals to NIT. b) Carrying local export containers from NIT to the two port terminals. ii) Requirements Unlike export containers, which tend to arrive at the Port on a more evenly distributed basis six days per week, it is the peak demand of the large volumes of import containers arriving by ship that will drive the capacity requirements for shuttle operations. It is assumed that local market containers discharged by ship on any given day must be available for pick-up at NIT early the following morning. The ability to move the containers to NIT within this 24-hour window is paramount to making the rail shuttle operation a success. Grounding of import containers at the port terminals is to be avoided, due to the relatively high handling costs on dock as compared to NIT. Therefore, sufficient rail cars need to be on hand in order to meet a target of no more than 10% grounded import units per week. With a typical large vessel discharge of 500 containers, 34%, or 172 containers are for local distribution. Figure 7.4 describes a generic daily rail car demand distribution to move local containers to and from NIT. Railcar requirements are predicated on using a double stack (DS) car fleet that is captive to the shuttle service. A rail car length of 64 ft, with a gross load weight of 165,000 lb (74,842 kg) per platform has been used in this calculation. It is assumed that a peak of two large ships or 344 local destined containers would need to be discharged one day per week at Halifax.

In keeping with the requirement for next-day availability, the target is to move the 344 local containers to NIT by shuttle within 12 hours. This scenario would allow for an occasional third ship to be handled within an 18-hour period. By extension, and assuming extra rail crews were available to operate the shuttle, it could be possible to handle as many as four large ships within a 24-hour period, provided these cars could be recycled back to the port. Figure 7.4
Daily Port Railcar Dem and

160 140 120 100 80 60 40 20 Day1 Day2

Railcars

Import Demand Export Demand Day3 Day4 Day5 Day6 Day7

Figure 7.4 indicates the relative cars required on a seven-day cycle. The demand for railcars is greatest on a day when there are two ships. Since yard and train crews have limits on their daily hours of work (12 hours by law; 8 hours before overtime), the length of time per shuttle run impacts the number of crews and their cost. With a two-terminal port operation, a shuttle from Halterm would be required to stop at CeresGlobal (using Rockingham Yard) enroute to NIT. Similarly, on the return trip a stop at Ceres with export traffic would be required. In addition, with the split port terminal operation, railcars will have to be moved back and forth between the terminals in order to prepare for ship discharge at either terminal based on demand by day of week. Sufficient cars will need to be kept at NIT during daytime hours Monday through Saturday to allow live loading of exports from truck directly to rail, in order to avoid additional handling costs at NIT. Having sufficient cars on hand at NIT, Ceres and Halterm at any given time will therefore be the logistics challenge. This is achievable provided that the switching support that exists at the port terminals today continues and is utilized to support the shuttle service. This will take a high level of control and co-operation as well as good information flow in order to position railcars ahead of ship arrival. The operational viability of the shuttle lies in the ability to match the positioning of railcars to load demand and location, while handling the peak volumes during the week.

7.4 Distance to NIT Determining the least number of dedicated railcars required for a shuttle fleet will depend upon whether railcars can be cycled more than once in a 24-hour period. This will be greatly affected by the distance between NIT and the port. Keeping NIT within a distance where shuttles can be operated by local ‘yard’ crews working an 8-hour shift with the ability to make immediate adjustments, will maximize shuttle flexibility. Longer distances may require crews to become dedicated to single train movements. Returning crews from NIT without rail cars becomes cost prohibitive if NIT is too far from the port, whereas if it is kept within a 15-mile radius, it may be relatively easy to reposition crews as required. Figure 7.5 shows the rail distances between various sites and the port terminals. Note that a shuttle round trip to Milford Station represents a distance of 72 miles (116 km) from Halterm, while a round trip to the Rocky Lake site represents only 24 miles (39 km). Figure 7.5
RAIL DISTANCE CHART (miles)
Site HIT (equivalent) Halterm Ceres (Fairview Jct) Rockingham Quarry Windsor Jct Oakfield Lantz Milford Station Debert 1 Mileage 3.5 0.5 5.0 6.0 12.5 15.8 29.0 33.0 36.5 77.0 Windsor Jct 15.8 Milford Station 36.5

Comparing the Milford Station and Rocky Lake sites, and referring back to Figure 7.3, the round trip to Milford Station uses the busiest sections of mainline west of Windsor Junction, and requires moving over 58 miles (92.8 km) of single track. Conversely, the Rocky Lake site requires only traversing 10 miles (16 km) of single track between miles 7.0 and 12.5 (km 11.2 and 20), and moves over a less busy portion of the mainline. Mileage costs increase with distance, and overall reliability of the service tends to decrease as distance increases due to the greater risk of delays. These delays can occur because of weather, operational congestion, maintenance, accidents, etc. Therefore, as a fundamental shuttle principle, rail distance to NIT should be minimized for increased operating reliability, notwithstanding all other location factors. The value is in moving containers from expensive on-dock areas to the nearest suitable site where storage space is available at a reasonable price, and distribution facilities are close by. 7.5 Shuttle Schedules There are several trades-offs that must be evaluated in determining the best schedule for the shuttle. Distance is a major factor, made even more important by the following considerations:

1. Number of Railcars: Fewer railcars are required for the shuttle if they can be cycled more times in a 24 hour period. 2. Number of Shuttle Crews: The fewer the crews, the less the operating cost. 3. Number of Shuttles: With more shuttles comes the flexibility of using those crews to move empty rail cars and easier adjustments to the plan for positioning rail cars for the next day. 4. Size of Shuttle: The longer the shuttle, the slower the schedule will be. Movements over 2,500 ft (2,286 m) should be avoided unless the distance to NIT is very long. The shorter the distance, the shorter the length of a shuttle movement. 7.5.1 Rocky Lake Schedule By examining the running times from the port terminals to Rocky Lake, it can be shown that a three-hour round trip is possible. Figure 7.6 shows a typical shuttle schedule. Figure 7.6
Rocky Lake Shuttle
Westbound S7 18:30 18:55 19:20 19:35 S5 15:30 15:55 16:20 16:35 S3 12:30 12:55 13:20 13:35 S1 9:30 9:55 10:20 10:35 Dp Halterm Ar Ar Ceres Dp Dp Rockingham Ar Ar Quarry Dp 0.5 5.0 7.0 12.5 BEDFORD SUB S2 12:05 11:40 11:15 11:00 Eastbound S4 15:05 14:40 14:15 14:00 S6 18:05 17:40 17:15 17:00 S8 21:05 20:40 20:15 20:00

Sufficient time is provided to pick up and set off the cars at Fairview Cove in either direction, provided local switching support is still available at both of the port terminals to make the actual switch on and off the dock, and assuming sufficient track is provided at NIT to handle the import traffic without additional switching. A single 8-hour shuttle crew could perform the first 2½ trips to NIT (S1, S2, S3, S4 and S5). Note that Rocky Lake is close enough that a crew may return to Rockingham quickly by taxi if necessary, so crews could change shifts at NIT as well as the port. A second shuttle crew would be required to perform the remaining shuttles for the day (S6, S7 and S8). It is very important to note these are generic schedules based on a 3-hour cycle and that, on certain days, no shuttle may be required, while on other days, one or two shuttles may operate, while all four roundtrips may be required on occasion. These would depend upon the day of week and the positioning of cars. When the proposed shuttle schedules are overlaid with the existing train schedules there is relatively little interference, as indicated in red in Figure 7.7. Note that Train 121 and Shuttle S7 are the only real conflict, and this does not pose a serious schedule problem. For example, S7 could be rescheduled for an 18:45 departure.

Figure 7.7 7.5.2 Cycling Impacts It is recommended that the dedicated railcar pool be divided into sets, which can be easily identified and organized. This would allow operating personnel to relate to them, either by name or number, so that the shuttles would not be viewed as ‘just another yard assignment’ with various cars, but as regularly scheduled movements. The shuttles need generic, easily remembered schedules for consistent plan execution, whether or not they operate on any particular day. Operating to a planned window is more consistent than ad hoc scheduling. Based on the proposed shuttle times, it would be possible to cycle the operation on the following load/unload sequence shown in Figure 7.8. This diagram shows three sets of railcars and their cycling via a shuttle operation between NIT and the port terminals. NIT is represented with two unload/load (called pad) tracks. The letters L and U represent actions of Loading or Unloading railcars. For simplicity, the port is shown as one pad and one hold track, but would in actuality represent both Ceres and Halterm pad and hold tracks. In this scenario, the dedicated fleet would be broken into three sets of equipment. The colours red, blue and green signify these three sets.

Figure 7.8: Load and Unload Sequence Note that two sets of railcars always start at the Port in the morning to continue loading from the vessel, even as one set is moving toward NIT. The third set will start at NIT each morning. Switching is indicated by green boxes (other yard assignments at the Port) and yellow boxes (shuttle switching at NIT). Train 122 is shown in yellow since it would occupy part of the NIT pad with domestic rail cars, as it does today at the HIT terminal. Outbound Train 121 domestic container traffic for CN would be taken to Rockingham (similar to today’s yard move) for departure on 121 by the 17:00 shuttle. The thick arrows represent sets of cars that are unloading and loading. The dotted lines represent decisions regarding railcar positioning with the last shuttle as required for the following day, although this could happen on any particular cycle. Minimizing the unnecessary movement of railcars is important in keeping operating costs low. Figure 7.8 shows three cycles of equipment – each set of rail equipment cycling once. This requires six one-way shuttles to accomplish (Shuttles S1–S6). Each set of equipment cycles as required based on the volumes unloaded at the Port. Sufficient rail cars are placed at NIT to ensure that the loading of truck exports continues ‘live’ as they arrive. Should additional containers need to be moved, additional shuttles S7 and S8 can be added on certain days of the week as shown in Figure 7.9. This allows individual peaks to be handled without the necessity of adding more railcars in order to handle these peak volumes. Figure 7.9: Rocky Lake Shuttle
4 Cycles with Rocky Lake Shuttle Using 3 Railcar Sets (Red, Green, Blue) Time => 6:00 11:00 14:00 17:00 20:00 22:00 NIT L L U&L U&L U&L U Load Track 1 Load Track 2 T122 Enroute S1 S2 S3 S4 S5 S6 S7 S8 PORT L L U&L U&L U U Load Track Hold Time => 8:00 9:30 12:30 15:30 18:30 21:00 23:00

This pattern could be extended to more shuttles into the overnight hours (S9 & S10 – not shown) should exceptional circumstances warrant. The extra cycles provide a large degree of flexibility in meeting peaks without the cost of having additional railcars available on site. Figure 7.10 describes the railcar demand for import and export container traffic and the supply of railcars based on the number of cycles those railcar sets perform daily. With the ability to cycle three sets of rail equipment, each with about 38 cars, a total of 113 rail cars are able to supply the demand at both the port and NIT except for the import peak discharge of 150 containers one day per week. This peak demand can be accommodated by cycling one set of cars one extra time (i.e., a fourth round-trip shuttle for that one day). In this way, the 113 railcars provide the equivalent of having 150 cars each cycling just once, without having to lease additional rail cars. The benefit of utilizing an extra crew for this move once a week is more economical than leasing additional cars yearly, by a factor of about 4:1. Furthermore, two extra shuttle cycles in exceptional circumstances allow 113 railcars to handle the equivalent of 188 railcars cycling only once. Figure 7.10

There are limits to the effectiveness of this additional cycling. While it may appear better to have five shuttles each day to reduce the number of railcars on lease, the additional train crews that would be required for extra shuttle moves more than three days per week would cost more than the savings realized by using fewer railcars. Thus for occasional peaks, extra shuttles are an economical solution, but not for a typical day’s volume. With the Rocky Lake site shuttle, there is flexibility to respond economically to meet shipping peaks on an as-required basis, ensuring that less than 10% of import containers would be grounded even on peak days at the port.

7.7 Other Rail Considerations CN has the potential to consolidate much of its operations at the Rocky Lake site. Dartmouth Yard, Rockingham Yard, Fairview Shops and HIT are all facilities that could be combined in this area. It is beyond the scope of this report to discuss the details or potential benefits, but redevelopment of real estate and consolidation of assets are two that should be investigated. As a first step, CN may wish to look at the relocation of HIT to the Rocky Lake site as a precursor to the full-sized NIT. Sufficient area is available at this site to permit this type of operation without significant rock excavation. If combined with an empty yard, it could serve as a first step to protecting this site for future intermodal development. 7.8 Conclusion The Rocky Lake site is close enough to the port to allow flexibility in equipment cycling and scheduling in order to handle peak volumes and the reality of late ships, without adding significant operating cost. This distance impact is best described by comparing it to the Milford site, which did not provide the ability to cycle railcars in order to handle peak volumes, resulting in operating costs which were estimated at more than double those of the Rocky Lake shuttle. In addition, the Rocky Lake shuttle avoids the busiest segment of mainline operations around Halifax, providing less interference, more flexibility and reliability of service. Over the long term, the shuttle costs should remain relatively constant as port volumes increase. The peaks will fill in, making better use of existing railcars. Longer shuttle trains will only incrementally add line haul costs. Thus, the shuttle will become more cost-effective per unit moved as volume grows.

8.0 The Railway Cut Truckway
8.1 Vision Prior to the Halifax Explosion on 6 December 1917, all rail traffic into Halifax followed the northern shore of the peninsula to the narrows, and then roughly the alignment of Barrington Street to the North Street station and further south into the downtown. Following the devastation of the Explosion and the rebuilding effort that was undertaken, the rail line was re-routed to the present rail cut, partly as a make-work project and partly to relieve the congestion caused by the rail lines in the downtown area. The railway cut, which for the purposes of this discussion can be seen as a link between the Bayers Road/Bi-High entrance and the Ocean Terminals, can be looked upon as an underutilized transportation resource within HRM. A number of studies have been undertaken in recent years to determine what other uses could be made of the cut in addition to present railway uses. The route is illustrated in Figure 8.1. 8.2 Existing Right of Way The rail cut is essentially a double-track facility, with much of the second track removed from service. A number of issues present themselves if trucks and other traffic are to coexist with present rail uses. An ideal solution, from a transportation planning point of view, would be to connect the Bicentennial Highway to the rail cut with continuous twoway traffic to and from Lower Water Street. This would provide direct truck access to the Ocean Terminals and commuter access to the downtown via an expressway that would remove a considerable volume of traffic from west- and south-end streets. However, this use would present serious cost and environmental implications. To the casual observer, the cut may appear to be as wide as a two-lane road when, in fact, each track takes far less width than a normal one-lane road for two reasons. First, railways require no shoulders or pull-off areas for bypassing disabled traffic. Second, a railway car’s lateral movement is less than 2 inches (5 cm), while trucks typically require 4 ft (1.2 m) or more of clearance for steering adjustments. In order for a two-lane highway to be built, CN would have to agree to a joint management or operation of the roadway. CN has stated it will work with HRM on an arrangement for trucks in the cut, but the interference of train operations, but paving over the single track to create a combined track and roadway is unacceptable to them because it will interfere with train operations. Therefore, one track would be required to be physically separated by a concrete barrier from any roadway configuration. The previous engineering studies indicate the cut is generally wide enough to provide a single lane right of way, with a partial shoulder, for a cost of about $40M. This includes widening 50% of the cut from 38 ft (11.6 m) to about 50 ft (15.2 m), plus the price of a new bridge spanning Chebucto Road (photo 11 in Appendix D) as well as additional clearances for Bayers Road (photo 14). The $40M includes a single-lane road but no shoulders would be configured under the other 12 bridges or where electrical towers are located directly to the south side of the cut in about 10 locations. This estimate appears reasonable given the minimal extent of engineering analysisundertaken in those studies.

Figure 8.1: Map of Rail Cut If a two-lane highway were to be constructed in addition to the remaining track, calculations show that it would require a cut width of 77 ft (23.5 m) for approximately 50% of the length, as well as the rebuilding all 14 bridges. This would be at a cost much higher than the $40M estimate. The bridges are now over 80 years old and may be at the end of their useful life in any case. 8.3 Environment The cut would have to be widened in a number of locations and the environmental issues would need to be addressed. It is possible that CN could widen the rail cut as a matter of right, providing it was done without the need to apply for a blasting permit. Most rock removal in Halifax is now undertaken with hydraulic breakers and this technology could be applied to the widening of the rail cut. 8.4 Design The detailed costs of building a roadway would also vary, specifically based on the type of use and operator liabilities. The route could theoretically accommodate three types of potential traffic, truck, bus and private vehicles, but each has a different environmental impact and different benefits. The cut would provide trucks with an alternative route, which would appear to be at least environmental beneficial. Buses would benefit from faster transit times, but the actual numbers of commuters and time saved would have to be weighed against the cost. Finally, private cars could avoid city streets enroute to and

from downtown, but a full environmental assessment of the impact of encouraging the free flow of vehicles into the downtown core would be advisable. While a one-lane roadway has significant operational disadvantages as compared to a two-lane design, there are four major reasons why the one-lane option is appropriate: 1. CN has stated it will not agree to paving over the track to make room for a second lane, in order to protect its ability to operate rail movements without delay. It is agreeable to discussing the removal of the remaining service track that remains in the cut, but only on a commercial basis. 2. Were CN to consider, in principle, the idea of paving over one track, several very real engineering issues remain in an open cut scenario. Unlike enclosed tunnels that were cited in the previous study, the rail cut is fully exposed to the elements. Snow removal is problematic with few areas to plow or pile snow. The likely solution would be to pick the snow up and take it out of the cut by truck, at a significant operating cost and potential disruption to traffic. As well, ice can build up in flangeways with heavy trucks continually compressing snow. While there are both operating as well as engineering solutions to this, given the length of the cut, it would add considerable cost to the truckway estimate. Any solution that increased any risk of derailment next to the road, albeit marginally, would be unacceptable to both CN and HRM. 3. Further, different uses and types of traffic require different minimum standards and access planning. For example, private trucks could be ‘licensed’ to move on the route as private property at their own assumed risk. A pass would both restrict access at entrance points, and track the use for a toll fee. By removing public participation from the cut, the costs could be kept in line with estimates. On the other hand, a public thoroughfare built on private property would require incorporation of safety standards equivalent to those for provincial roads, which would add to the costs. Bus-way requirements would also require significantly higher safety standards than a private truckway. A one-way traffic lane allows for the typical provincial road standards to be more easily accommodated in the design, making the road accessible for a number of uses, rather than just trucks. If only trucks are permitted, using the south side of the track may be suitable. However, if buses or public access is permitted, flyover connectors and additional access points may have to be added. 4. The present study addresses the use of the cut by trucks only. But transportation planners in HRM may want to consider the utilization of this resource in the broader context of traffic problems on the peninsula and access to the peninsula. There is sufficient property in the CN Fairvew Shops area, or with the impending closure of the Chester Spur at Joseph Howe Drive, to provide relatively easily engineered on and off ramps for the truckway. Obviously, any route should provide good access to Highway 102 near the Bicentennial Highway and good access to the MacKay Bridge.

8.5 Truck Issues 8.5.1 Operational Design In terms of operating the rail cut as a truckway, the following assumptions are made: a) There would be single-lane, one-way traffic. The rail line operation would be unaffected and no portion of the rail line would be within the truckway. A schedule for directional changes and a procedure to accomplish that safely would be developed with the stakeholders. The flow schedule would become well known and adhered to. For example: 2130 to 0900 0930 to 1200 1230 to 1500 1530 to 2100

Southbound Northbound Southbound Northbound

b) All trucks doing business at Halifax Ocean Terminals, including container transport and break-bulk transport vehicles, would be required to use the rail cut. c) 53% of the Halifax Ocean Terminals’ truck movements would be eliminated from the downtown core. The following advantages and disadvantages of the truckway are noted: Advantages       All trucks to and from Halifax Ocean Terminals would use this facility; There are no legislative obstacles; There would be a significant reduction in downtown truck traffic; There would be a reduction in truck transit times, although not in distance; The top end of the truckway is close to Highway 102; There is little or no impact on rail operations during construction or operation.

Disadvantages  One-way traffic will be an inconvenience;  The capital cost of $40M cannot be justified based on the operational savings;  Local opposition is already in evidence and can be expected to be well organized, well financed and vocal;  There is no improvement in the port’s capacity;  Snow removal and winter operating conditions may present problems;  A breakdown of a vehicle on the truckway could shut down the entire route;  Limiting access and security enforcement may be an ongoing problem.

8.6 Rail Cut vs. NIT Concept The utilization of the rail cut for truck traffic as described, and the development of the NIT accessed by rail, are concepts that address different but overlapping truck issues. The NIT will remove 100% of the intermodal truck movements from downtown and the Rockingham/Bedford area, whereas the rail cut will remove 53% of all the Halifax Ocean Terminals area truck movements from downtown. The rail cut provides overall savings of $141,000 per year, as set out in Figure 8.2, mainly as a result of the reduced driving time which more than offsets the increased trucking distance. Even if the $141,000 saving in trucking costs could be recaptured through a user fee, it is not sufficient to amortize the $40M capital cost associated with this option. Figure 8.2: Rail Cut Economic Advantage $ per unit Trucking distance (thousand truck-km) Trucking time (thousand truck-km) 1,060 389 Units 4 -374 Cost ($K) 4 -145 -141

Overall transportation cost increase

Individual infrastructure projects taken out of context with the master plan are not necessarily intended to be self-financing. If the project were to proceed, the following steps would be required:  The rail cut needs to be widened in order to accommodate the truckway. This could and should be done without blasting, in order that the CEAA permitting process will not be triggered. As the major use of the rail cut will still be rail traffic, the project can proceed as of right.  The Halifax Urban Greenway Association, which is trying to create a hiking, jogging, cycling path along the CN lands, would probably press for an environmental assessment, which should be done in any case. The environmental positives will probably balance the negatives.  HRM plans are inconsistent as to the zoning of the railway cut and as to land use thereon. The cut should be consistently zoned and perhaps should have its own special transportation zone designation which would prohibit the construction of further homes on the available land, particularly on the west side of Beaufort Avenue. It should be recognized that the zoning would not necessarily prevent the development of the land as it is under federal jurisdiction, but a transportation zone from Bayers Road to the Ocean Terminals, properly worded, would in the long term facilitate the utilization of this space for uses compatible with transportation.

8.7 Environmental Issues The use of the rail cut as a truckway or as an additional vehicle expressway to the downtown area should be the subject of a detailed environmental impact assessment. There will be positive and negative events in the environmental risk profile. It would appear that there are no significant habitat or cultural resources that would be causes for concern.  There may be contaminated soils but the rail bed is built on bedrock and very little overburden exists in the cut other than the ballast for the rail line.  There will be an improved local air quality in the downtown area as a result of the removal of 53% of the truck movements to and from the Halifax Ocean Terminals, but a concomitant reduction in air quality along the rail cut.  Concerns over the air quality and noise issues regarding the utilization of the railway cut as a truckway need to be addressed. The rail cut does not provide shorter distances to the downtown, but does change ‘stop and go’ city driving to expressway driving conditions. The following table shows typical distances from a number of destinations to and from Halifax port terminals. Figure 8.3: Driving Distances to Port Terminals Burnside Halterm Rail Cut 15 14 Bayers Lake 13 17 Other HRM 4 13 Truro 110 109 Valley 125 128 South Shore 106 109

8.8 Road Safety While always an important issue, the safety of truck traffic on the dedicated one-way roadway in the rail cut can be achieved with reversals of flow and inexpensive control systems. The flow would be reversed using a set of gates operated with a single key. As the gate was lowered to stop traffic flow in one direction, the key would be retrieved and the cut would be swept to ensure that all vehicles have passed through the cut to the gate at the other end. The same key would then be used to open the gate from the new direction, with the key remaining captive until the next change of direction. All traffic would be monitored with surveillance cameras mounted on existing bridges and all stalled or broken down vehicles would be towed. In addition, regular policing would be put in place to control access and further enhance security.

9.0 Economic Analysis
This section of the report provides an analysis of the costs, benefits and overall economic impacts of the proposed development options. With the reduction in truck traffic in downtown as the main purpose behind this study, the specific options under consideration include the development of a NIT and the separate project of the dedicated truckway through the rail cut. The resulting overview of benefits and costs associated with the proposed trucking options is based on a comparison of these alternatives:  Status Quo;  Build a NIT;  Use the rail cut as a truckway; 9.1 Status Quo Under the status quo, current trends are tracked to identify, for example, the point at which the HPA facilities will need to be expanded or recapitalized (through fixed capital redevelopment or through a more significant equipment replacement/update). Under this option the projected capital and operating costs associated with development options are saved but this fails to provide for increased efficiencies/economies associated with the development and, likewise, does nothing to forestall capital expansion of HPA facilities which would otherwise be necessary to increase throughput and remain competitive. The underlying assumption is that the current trend in port growth will continue. From HRM’s perspective, this option does nothing to abate the current traffic congestion in downtown Halifax and, in fact, places HRM on a path to increased traffic congestion as the port continues to grow in its handling of container cargo. From the perspective of the HPA, the status quo does not create a problem as such, but it does not provide the port with any provisions for the future. If the limitations of current port capacity are left unchanged and there is no provision for increased capacity, growth in port traffic becomes constrained. Opportunity costs associated with this option suggest that a continuation of growth in port traffic will necessitate an expansion in some combination of increased port terminal area (for marshalling and lay-down area) and/or through the addition of more capital equipment. ‘Doing nothing’ and not preparing for this eventuality may lead to ‘reactionary development’ that involves a comparatively higher cost alternative (i.e., the development of a new waterfront facility, the redevelopment of a higher cost transportation route through the city’s core, the acquisition of higher cost lands for an inland terminal, and the location of an inland terminal that is less optimal than site options that are available today). Thus, with the natural evolution of the terminal, the ‘status quo’ is not quite a ‘do nothing’ option.Rather, it is an option to do something later when the timing is more critical and the remaining options are likely to be significantly inferior to those available now.

9.2 NIT The second option results in the construction of a NIT, located to maximize surface transportation options and link to the HPA area through rail service. The research conducted in earlier tasks led to the selection of a candidate site near Rocky Lake in Bedford. The site was selected through a multi-criteria analysis where data on traffic flow estimates, trip origin, destination of truck traffic servicing the port, land development costs, zoning and land availability, and other factors were considered. As a quasi-greenfield development, Rocky Lake will allow for an optimal inland terminal configuration that is expected to increase the overall capacity of the HPA system by 250,000 TEUs per year through releasing land and improved trucking efficiency. The site also provides a unique opportunity to integrate planning with subsequent expansions of the Burnside Industrial Park (based on the proposed Rocky Lake location). 9.3 Truckway Under this option the CN railway corridor is redeveloped as a truck route running from Fairview Cove to Halterm. This would be shared with the existing rail traffic, albeit with controls in place to ensure compatibility of flows. 9.4 Framing the Benefit / Cost Analysis In this section the issues relevant to the project options are identified, including the context for the analysis, the perspectives of the proponents and other stakeholders, the conceptual range of expected benefits from the improved truck routing and the anticipated costs. i) Context: Multiple Project Proponents Having multiple project proponents for a comparative assessment of project alternatives creates a methodological challenge in that the benefits and costs that accrue to each stakeholder do so in varying amounts in each option. The challenge in this analysis is to present a relevant frame of reference so that the costs and benefits faced by an individual proponent are treated appropriately in the wider analysis, i.e., address the net, system-wide distribution of effects under each option. In the analysis, it is the system-wide effects that are discussed as the final result since they represent the aggregate benefits and costs faced by each individual proponent through the distribution system that allocates these benefits and costs. Effectively, this netting together of benefits and costs at the system-wide level can create a case where the greatest net benefit to one stakeholder can ‘compensate’ net losses of another stakeholder. Described differently, the analysis is unconstrained and a dollar of benefit for one proponent effectively compensates a dollar loss incurred by another proponent, even though the individual entities within the system can face disparate individual net outcomes.

ii) Purpose and Proponent Goals The use of the rail cut as a dedicated truckway and the separate development of a NIT are projects that are intended to mitigate a number of challenges faced by the HPA, HRM and CN. Accordingly, each project proponent has its unique reasons/purposes that led to the present study. These purposes, expressed as either a problem to be solved or an opportunity to be realized, include: HRM Objective – Diversion of Truck Traffic: o The problem of traffic congestion and the desire to divert truck traffic from downtown city streets and improve traffic flow and use of downtown streets, as well as the notion that the railway cut is an underutilized transportation corridor for road and/or rail use. o The opportunity presented by the railway cut as an underutilized transportation corridor, for rail and/or road use HPA Objective – Operational Efficiency and Growth: o The problem of expansion and the need for room for growth to remain competitive, o The opportunity to improve the effectiveness of the operations at HPA, o A growth opportunity to improve and increase transload and distribution activity within the region, o The opportunity to improve productivity and space utilization at container terminals by providing more of the terminal space for transhipment and outbound activity and use the inland facility for local/regional/continental distribution. CN Objectives – Operational Efficiency and Growth: o The opportunity to improve efficiency of rail service, o The opportunity to provide short haul rail service. In considering these individual purposes, it is clear that HRM’s motivation is more about ‘problem solving’ in relation to the downtown traffic management, while CN’s and HPA’s motivation has more to do with the ‘opportunity’ created by the two options being considered to divert truck traffic. iii) Defining the Stakeholders The stream of positive benefits that are anticipated from the diversion of truck traffic include improved efficiencies in traffic flow, truck access, the reduction in negative externalities, and longer term benefits through increased capacity and related opportunities (and/or more effective use of existing capacity). The costs are expected to include the financial burden to do this, the negative impact or increased truck traffic in areas where there is presently much less truck traffic and the associated noise and impact on area residents. iv) Inventory of Expected Benefits There is a range of benefits flowing from the direct objective of removing/reducing truck traffic in downtown Halifax and providing a dedicated truck/container

transportation route in the rail cut or NIT option. The methodology applied includes the following main benefit and cost components: a) Benefits – A quantitative assessment of the benefits that have been identified and associated with each option. Benefits are categorized as positive increases in efficiencies or decreases in costs or negative externalities (such as abatement of pollution through less fuel consumption and reduction in traffic congestion). There are two levels of benefits addressed – those with readily available/identifiable monetary values, and those that are more qualitative – and these are described as: o Benefits with Monetary Value – quantified based on major assumptions from the engineering/estimating steps conducted earlier. o Qualitative or Conditional Benefits – more nebulous and consequently less easily quantified aspects of the cost/impact assessment developed in this section using case study analyses and, in particular, the experiences of the consulting team with similar transportation projects. 2 b) Costs – Financial and Non-Financial: A quantitative assessment of the costs is identified and associated with each option. Life-cycle-cost analysis is used to present all costs that have been identified under the following categories: o Initial or Development Costs – (e.g., site costs – acquisition, land amalgamation, relocation of displaced land owners, road alignment, etc; planning costs – design and engineering costs, construction costs). Costs would include site-related rehabilitation/remediation that may be necessary in each option to release land for other uses, e.g., removal/relocation of rail services; o Operational Costs – those associated with ongoing costs of operating the facilities under the various options (labour, financing costs, equipment costs, etc.); o Rehabilitation Costs –those that may be associated with capital replacement over the life of the project and are beyond routine/annual maintenance activity, such as the replacement of a breakwater or the rehabilitation of the wharf face; o End of Project Costs – in this case, the salvage value of the facilities at the end of the project life; o Opportunity Costs – the value of the resources used in a given option contrasted with their ‘best’ alternative use and, for the most part, implicitly dealt with in the comparison of the ‘rail cut’ and ‘NIT’ options. c) Input-Output Analysis – a level of analysis separate from the benefit cost approach, this economic analysis tool is used to model the direct, indirect and induced economic impacts from the project and operational spending associated with the preferred development scenario.

2

Benefits in this category include opportunity for more optimal use of downtown city streets for parking and other light commercial service/retail operations located along the present trucking routes. Such items can be assessed through Hedonic pricing and Contingent valuation (willingness to pay) approaches, both or which are relatively data intensive approaches. These are identified in the analysis but only assessed to the degree that leads to confidence that they arise and the data are present to measure their influence.

Estimates used in this analysis have been derived from the study effort highlighted above in developing construction cost estimates under alternative scenarios, operating cost estimates, and estimates of fuel consumption and travel times, among other data points. Further details of the methodology are discussed throughout the analysis to highlight specific assumptions concerning benefit and cost estimates, the manner in which the data are considered and other factors. In addition to the effects on proponents and stakeholders, the non-commercial stakeholders include: o Owners of private vehicles:  Increased mobility for private vehicles in the city core,  Reduction in stop-and-go miles traveled,  Increased ease of mobility for private vehicles operating within the city core,  Net benefit to private vehicles from:  Efficiency/gains in productivity – less travel time to and from work,  Fuel savings,  Travel time savings (i.e., shorter transit times resulting from improved traffic management)  Reduction in vehicle operating cost savings – improved access results in less vehicle damage/wear and tear and better fuel efficiency.  Auto operating/ownership cost savings, o Pedestrians:  More streets conducive to walking. Landowners (direct, adjacent/abutting property owners): o Property owners/residents in the downtown core:  Opportunity to provide more retail street frontage (becomes more appealing as retail use) in former truck route areas,  Reduction in noise impact along downtown streets,  A more efficient use of lower value inland parcels – less demand for land that may otherwise be necessary for industrial/commercial development in the urban/downtown area, o Property owners/residents along the rail cut:  Negative – Increased noise level,  Negative – Vehicle emissions, o Property owners/residents near proposed NIT site:  Added value to commercial sites in the Burnside area,  Relocation of rail from residential area to open lake frontage,  Negative – Noise Level,  Negative – Lighting,  Site preparation, General Public: o Public/Environmental/Health & Safety:  The effects of truck trip redistribution on the generation of greenhouse gases,

Non-Financial Costs o Landowners along transportation routes see increased traffic, o Property owners/residents along the rail cut face Increased noise level, vehicle emissions, o Loss of ILA jobs with move to NIT. Turning from the theoretical to the applied, data limitations will inevitably drive what is and is not quantified and therefore what forms the benefit cost analysis. For example, using a quantitative approach, the study attempted to consider the impact to property owners in terms of municipal taxation and real estate values. Following a

review of assessments and the areas impacted, it was not possible to identify the market influences that would drive assessments in one direction or another. Considering that homes abutting the rail cut are currently on an active rail line, the question becomes “will more rail traffic or truck traffic in a below grade cut affect property values that have been established with the cut already in place?” In discussions with real estate experts on the study team, it was the consensus that this would not be an appreciable change; these properties are located along a transportation corridor that has existed for 80+ years. The value of the real estate as set by market transactions over these many years would naturally account for all attributes of the property. It is indeterminate if increased traffic in that corridor would affect values. A survey or similar analysis could be conducted to resolve this point. The reduction in truck traffic downtown would improve the traffic situation there, but it was not possible to determine whether property values along the affected streets would rise. These properties are on major transportation routes in the city’s core which would still be used by (some) trucks, although the opportunity for more automobile traffic may result in additional retail opportunities and this may boost property values. Finally, the proposed location of the NIT and the realignment of the rail line would provide waterfront property for some landowners in the area of Rocky Lake and remove waterfront property from another parcel of land. The net effect is once again indeterminate because the land given over for the new alignment will have the value of this waterfront land reflected in the sale price of the property. As to the newly created waterfront parcels abutting the rail line that may be removed; will they own the land or will CN retain this right-of-way, in which case the land owners then have a linear trail along the front of their properties. 9.5 Options Considered Although there are basically three options being considered, the analysis was expanded to include combinations of options. This was done to address various growth scenarios. The options include:  Status Quo – ‘do nothing’  Build NIT  Build NIT and New Ocean Terminal (NOT)  Build NOT w/o NIT  Truck Use of Railway Cut. Status Quo: The ‘do nothing’ Option – Under this option, the HPA system-wide capacity is fixed at 900,000 TEUs and nothing is done to address either truck traffic or the growth that may be expected at the port. This option does nothing to:  Address truck movement through downtown;  Improve port operations; or  Improve port capacity. Build NIT – The construction of a NIT at Rocky Lake is presented as the next option. Under this option, the HPA ocean terminal capacity is given a 250,000 TEU boost so that the combined system capacity would be 1,150,000 TEUs.

The estimated cost for this facility is $56M. It will have the benefit of eliminating intermodal truck traffic by diverting it to short-haul rail shuttle service, but will result in other costs such as increased handling, switching and rail km. The Burnside Connector between NIT and Burnside reduces the truck-kilometres between the HPA system and the local and regional source and end points for cargo.3 This option does not improve the system capacity offered by the NIT (i.e., the capacity is 1,150,000 TEUs) but it does improve the savings to truckers. Build NIT and NOT – The NIT and NOT Option is presented to consider what may follow the development of the NIT when the system capacity provided by the NIT is exceeded. Under the NIT and NOT, combined system capacity becomes1,700,000 TEUs through:  Current 900,000 TEUs  NIT 250,000 TEUs  NOT 550,000 TEUs The capacity contribution of the NOT is estimated at 550,000 TEUs levered from synergies within the system when it is built (assumed to include the NIT as well as the current capacity). The site/infrastructure costs required to provide this capacity boost are somewhat less than those required to provide the same capacity boost on a single site. Accordingly, the estimated cost for the NOT is lower ($225M compared to $300M). Build NOT w/o NIT – This option is presented to contrast the impacts of this path of development with those that have been considered. The effect of the NOT is to provide an additional system-wide capacity of 550,000 TEUs. The main difference between this and the Option with the NIT is that this capacity is provided on one site (rather than having any synergies with the NIT, for example). As a result, the combined system capacity reaches 1,450,000 TEUs (current capacity plus the NOT; 900,000 TEUs + 550,000 TEUs) but at a higher cost than the NOT Options with NIT. The NOT option by itself is estimated at $300M while the NOT with NIT is estimated at $225M because of added efficiencies associated with the NIT. Truck Use of Railway Cut – The use of CN’s railway cut for truck traffic would result in freeing city streets from some truck traffic. An estimated 53% of container terminal truck traffic would be funnelled through the rail cut truckway. The 50% diversion relative to the NIT options is due to the switching that will be necessary, as the rail cut would provide only one truck lane with a switchable direction signal (it is expected that city streets will be used by trucks when the direction of the traffic through the cut is contrary to their intended direction). The benefit of the rail cut option is a reduction in truck driving time (a more direct route), but there would be no increase in HPA system capacity. 9.6 Traffic/Capacity Analysis A HPA ocean terminal capacity of 800,000 TEUs per year was used, estimating that through some site modifications and additional equipment at Ceres and Halterm, a latent capacity of 100,000 TEUs could be added to the system for an upper bound system
3

The NIT with the connectors is actually an option within an option; however it has been treated it as one option because the prevailing thinking is that the connector will be built, particularly with the NIT in place.

capacity of 900,000 TEUs. The system limit of 900,000 TEUs is used in a model of projected traffic to identify the point when the capacity threshold is approached and exceeded. Growth rates in TEU volume were set at three different levels, reflective of historical growth rates, as follows:  Low Growth Rate = 3.00%  Moderate Growth Rate = 3.50%  High Growth Rate = 5.00% Figure 9.1

Growth rates were applied to the 2004 throughput of 525,500 TEUs to generate projections shown in Figure 9.1. 9.7 Analysis/Evaluation of Options In fulfillment of the study proponents’ objectives, the development of a dedicated truck route using the CN rail cut through peninsular Halifax is considered, along with the construction and operation of a NIT. The resulting overview of benefits and costs associated with the proposed trucking options is based on a comparative analysis of the alternatives that was conducted using an Excel-based spreadsheet Benefit Cost Model (BCA Model). This model provides the following analytical elements: a) Assumptions Page; b) Capital Cost Estimates; c) System Capacity Limits page; d) Determination of ‘When to Build’ based on capacity;

e) The associated implications for capital cost and the NPV of the expenditures in the period being modeled; f) An analysis of trucking flows; g) An economic analysis of construction costs; h) An analysis of benefits; and i) A comparative benefit cost analysis. The major assumptions included:        Inflation Rate = 2.00% Discount Rate for PV = 5.00% Annual Capital Cost Replacement/O&M = 2.00% New Ocean Terminal Capital and Equipment with NIT = $225M New Ocean Terminal Capital and Equipment without NIT = $300M Railway Cut = $40M HPA Terminal Capacity o Low = 800,000 TEU o High = 900,000 TEU o Latent Capacity = 100,000 TEU 2004 Throughput = 525,500 TEU Growth Projections o Low Growth Rate = 3.00% o Mod Growth Rate = 3.50% o High Growth Rate = 5.00% Based on a 40-Year Projection The maintenance added to annual expenditures at a rate of 2% of capital costs per annum reflects the cost of periodic repaving of the railway cut and other costs necessary to maintain the functionality of the infrastructure in all scenarios. With respect to the NIT, greater cost analysis detail permitted more precision in the replacement of equipment and maintenance schedules. Where available, this detail was used to account for the service life of the infrastructure.

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The Capital Cost Estimate page – provides construction and site development for the NIT, the NIT with the connector road, the estimated cost of the new ocean terminal (with and without NIT), and a cost for the truckway use of the rail cut. The Capacity Limits assessment, as mentioned above, looks at projected growth in HPA throughput and checks the capacity of the system in relation to the timing of the addition to the system capacity under the various options and across the three growth scenarios. This model allows for the consideration of ‘convergence’ or the time at which the exiting capacity in each scenario becomes constrained with respect to arbitrarily selected thresholds (i.e., 20% remaining excess capacity, 10% remaining excess capacity, 0% remaining excess capacity). This analysis provides the time in ‘years out’ when new capacity is needed under each growth scenario and within each option under examination. This includes: the Cumulative Capacity Adding NIT 'Boost' (with and without the connector road); the Cumulative Capacity Adding NIT 'Boost' (with and without the connector road) and the New Ocean Terminal; and NOT by itself.

The rail expansion, since it does not add to capacity, is assessed as though it is constructed in year 1. All other scenarios are built in the model in the year that the capacity limitation is reached in each of the three growth scenarios. The resulting ‘time to build’ provides the basis for determining the net present value of each construction option, which is provided in the analysis of NPV of Capital Expenses (the time to build establishes the number of periods relevant for the NPV calculations). All NPV calculations are discounted by a rate of 5% and all prices are increased at a rate of 2%. NPV of all options is based on the analysis of ‘when to build’, which came from the growth projections for all three growth scenarios. 9.7.1 System Capacity Limits and Project Trigger Figure 9.2 shows the relationship between the projected growth scenarios and the capacity afforded by each option; Figure 9.2

The rail cut option has the capacity limit associated with the status quo, as this option will not contribute to system capacity (TEU = 900,000). The NIT with the connector shows a capacity increase of 1,150,000 TEUs. NOT only is shown with a capacity limit of 1,450,000 TEUs. Finally, the NIT and NOT option affords the greatest capacity at 1,700,000 TEUs and provides the greatest ‘time until capacity is reached’ in each of the three scenarios. This is summarized in Figure 9.3.

In the Moderate Growth scenario, for example, the status quo is exhausted in 17 years (2022). The NIT would extend this capacity limit by 7–24 years (2029). Adding the NOT to this (SQ + NIT + NOT) would extend system capacity by 19 years (from 17–36 years 2041) through the added capacity of both the NIT (7 years - 2012) and the NOT (12 years - 2017). Under the low growth scenario, the system capacity provided by the combination of the status quo (900,000 TEUs), the NIT (250,000 TEUs) and the NOT (550,000 TEUs) is not reached in 40 years (2045). 9.7.2 Capital Replacement In the same way that projected growth thresholds are used to ‘trigger’ the timing of construction (based on years when capacity limits are reached), the phasing of the capital replacement that is required in the options is likewise linked into the project start date (associated with each growth option). This life cycle cost analysis was provided for the NIT project cost estimate because it was sufficiently detailed and provided useful life of major project components (crane, pavement, track, etc.). Given that the projections spanned 40 years, and the NIT project start date varied by the capacity limits associated with each growth option, the period remaining in the projection following the project start date (40 years minus the project start date) may be sufficiently long that major project elements would be exhausted in the remaining period. As a result of this, major elements were added into the NPV calculations based on the term of the useful life associated with the project elements. 9.7.3 Comparison of Options The core function of the BCA model developed for this assignment is its capacity to take the projected growth scenarios and, when capacity limits are reached, inject the project at the appropriate time to offset capacity deficits in each growth scenario. The resulting savings and costs are calculated based on the relationships identified in earlier research phases.

As noted in Figure 9.5, capacity limitations for the low, moderate and high growth scenarios are 20, 17 and 13 years (2025, 2022 and 2018) respectively. Given that the rail cut provides no particular improvement in capacity, year 1 was arbitrarily selected as the implementation of this option. Consequently, this option emerges with the lowest NPV, followed by the NIT, NIT with Connector, NOT with connector, and the NOT by itself. It should be noted that where there are cumulative projects (NIT + NOT), the timing of each is predicated on the capacity limits being exhausted as described above (i.e., NIT is done and boosts system capacity and NOT is done when the boosted capacity is exhausted some time later). Delaying the cost of the truckway would, of course, lower the NPV of that option further. However, as it is more directly feasible, it was added in the model in year 1 because it immediately addresses the problem of truck congestion. The other options, while addressing truck traffic, also address capacity and throughput and so their project starts are more appropriately timed in consideration of those issues. More succinctly, the NIT options are driven by container traffic alone, whereas the rail cut is driven by truck volume. 9.9 Project Benefits/Costs Because six (options have been considered over three different levels of growth, there are 18 individual outcomes that could be compared. Since the rank of the benefits and costs do not change within the three growth options, the written analysis has been focused on the moderate growth scenario (3.5%). The additions / (reduction) in truck-km traveled is provide in Figure 9.6. Figure 9.6: Additions / Reductions in Truck-km Travelled Km Added/(Removed) (Moderate Growth Scenario) Moderate Growth Rail Cut (Year 1) NIT (Year 17) Truck Distance Saved Truck-Kilometres Km of City Streets Freed Rail Container Km Per Year Truck-Kilometres Km of City Streets Freed Rail Container Km Per Year Today (000s) 4 (374) (840) (584) 1,040 Sum of Km (Yr 17 to Yr 40) (000s) 350 (32,729) (55,276) (38,430) 68,437

As shown, NIT has the greatest effect in terms of reducing truck-km traveled and this is significantly bolstered by the addition of the highway connector. Conversely, this option adds rail km traveled by virtue of the fact that the rail cut becomes the pathway for a short haul shuttle service between the NIT and the port. The rail cut option is responsible for the greatest reduction in city street truck km but this is offset somewhat by the significant increase in truck-km travelling the proposed truckway. Several sources suggest that the theory and reality of road surface management are rather disparate. The level of annual expenditure that will maintain a given level of

quality of road for a given period tends to be higher than that which is required. The implication is that road surfaces experience a more rapid loss in quality (road services) and a much more abbreviated life cycle. Thus, the proposed comparative analysis of road maintenance data for Lower Water Street, Hollis Street and Barrington Street (if it were available) would have little to do with the true cost, as in practice higher immediate annual maintenance expenses are tended to be foregone in exchange for lower road quality and shorter replacement cycles. Nevertheless, it is clear that road wear from trucks is significantly more for trucks than from cars. The Railway Association of Canada shows the passenger car equivalent for trucks in Figure 9.7 (note that one 8-axle 62,000 kg truck is equivalent to nearly 20,000 cars). Figure 9.7

There will be truck traffic on either the rail cut or on the road to Rocky Lake with the trade-off being the km diverted to other roads as they are removed from downtown. It should be noted that since the analysis is presented from the variance in truck-km (net incremental positive or negative change in truck-km) this trade-off is implicitly addressed. Figure 9.9 provides the benefit of the truck travel shift from restricted speed/access roads to higher speed roads. Figure 9.9 Benefit of Truck Travel Shift Value of Truck-Km Reduced Truck-Km Eliminated Rail Cut Year 1, 1, 1 NIT Year 20, 17, 13 Scenario Low Growth Mod Growth High Growth Low Growth Mod Growth High Growth Average Yearly Cost/(Savings) (000s) (66.8) (76.1) (113.8) (152.4) (165.6) (234.1) Sum NPV (Build Yr to Yr 40) (000s) (818.6) (905.8) (1,246.2) (674.7) (885.1) (1,513.8)

The value of the shift in km traveled is similarly assessed using the blend of US DOT and Canadian Alliance factors (calculated using a 25% factor to recognize the savings is only from the shift from ‘urban’ roads which are typically more costly to maintain). If the facilities are built in year 20, the NIT will yield an average annual savings of $152,410 in road wear and tear, with a NPV savings from cumulative savings from year 20 to 40 of $700,000. Figure 9.10 shows the volume of truck traffic that would persist if these vehicles were not diverted. This figure pertains to the moderate growth scenario and portrays trend lines for Halterm, HIT and Ceres, as well as totals for each the entire system and totals for the Halifax Ocean Terminals (i.e., excluding HIT).

The implication is that, with this rate of truck traffic growth, there will be nearly 600 trucks at the port, with 501 of these associated with the port terminals. 9.10 Greenhouse Gas Emissions Impacts on Greenhouse Gas (GHG) emissions for the proposed truck/rail systems are considered for the four Options: NIT Rocky Lake, NIT Rocky Lake and connector, NIT Milford Station and Use of Rail Cut. The first three options consider the use of rail transport to reduce the number of truck-km per year, including both highway and nonhighway distances. The final option makes use of a rail cut to reduce the number of offhighway truck-km. Figure 9.11 summarizes the increase (decrease) in annual transportation distances associated with each option. Figure 9.11: Summary of Transportation Distances for Truck/Rail Routing Options Option Truck-km per year Off-Highway Rail Unit-km Rail Trip Truck-km per year per year Distance (km) (306,000) (584,000) 256,000 (374,000) 1,080,000 1,080,000 3,836,000 0 22 22 60 0

The primary contaminants associated with tailpipe emissions that contribute to GHG and global warming are carbon dioxide (CO 2), methane (CH4) and nitrous oxide (N2O). These compounds, along with water vapour and ozone, are naturally occurring greenhouse gases and are continuously emitted to and removed from the atmosphere by natural

processes. For this impact assessment, only these compounds that are produced as a result of fuel combustion are considered. Appendix I of Canada’s Greenhouse Gas Inventory 1990-1999 provides emission factors for GHG emissions from mobile combustion sources. These emission factors are provided in grams of pollutant per litre of fuel burned for a range of on-road vehicle from light duty gas automobiles to heavy-duty diesel vehicles. This foundation paper also provides emission factors for off-road vehicles, including diesel rail transportation, which were used for this assessment. To apply the emission factors to the truck-km saved and rail-km added, an estimate of fuel economy is required. From a report entitled ”Energy Savings through Increased Fuel Economy for Heavy-Duty Trucks”4, a fleet-wide fuel economy for tractor-trailers of 5.3 miles per US gallon was obtained. Heavy-duty trucks are most fuel efficient when traveling at constant speeds in the range of 50 to 80 km/h. For off-highway travel, where frequent stops for traffic intersections and congestion are expected, a reduction in fuel economy is expected. An Environment Canada report5 indicates that for light-duty vehicles a fuel consumption penalty of up to 68% can be expected for a vehicle making 10 stops along a 10 km route. The report notes that this same trend (penalty) is also expected to apply to heavy-duty trucks. For this assessment, we assumed a reduction in fuel efficiency of 50% associated with off-highway travel by heavy-duty trucks. A report entitled “Influence of Duty Cycles and Fleet Profile on Emissions from Locomotives in Canada” 6 provided fuel consumption for various locomotives and duty cycles for each locomotive throttle position. The consultants used fuel consumption data for a SD-40 train (3000 hp) and assumed that locomotives operated at throttle position 4 and traveled at an average speed of 30 mph (50 km/h) over the entire trip. The corresponding fuel consumption is 389 lb/hr (176.45 kg/hr). The total number of locomotive trips per day (each direction) was 2.5. The one-way travel distance to the NIT Rocky Lake is 22 km for a total locomotive travel time of 2.2 hours per day. For the NIT Milford station, the one-way travel distance is 60 km for a total locomotive travel time of 6.0 hours per day. The following figure summarizes the annual GHG emissions associated with each transportation option. The total GHG emissions, expressed as CO2-equivalents, are obtained using the 100-year global warming potentials for CO2, CH4 and N 2O of 1, 21 and 310, respectively. The calculation for CO 2-equivalents is: Tonnes CO2 Eq. = (Tonnes CO2 x 1) + (Tonnes CH4 x 21) + (Tonnes N2O x 310) Results are provided for four scenarios: NIT Quarry, NIT Quarry & connector, NIT Milford Station and Use of Rail Cut. Bracketed values represent a net savings in GHG emissions.

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Therese Langer, “Energy Savings through Increased Fuel Economy for Heavy-Duty Trucks”, American Council for an Energy-Efficient Economy, February 11, 2004. 5 Environment Canada,“Trucks and Air Emissions”, Publication EPS 2/TS/14, September 2001. 6 Robert Dunn, Consultant in Railway Fuels, Lubricants and Emissions, “Influence of Duty Cycles and Fleet Profile on Emissions from Locomotives in Canada”, June 2002.

The NIT Rocky Lake and connector option is estimated to provide the greatest annual savings in GHG emissions followed by the NIT Rocky Lake option and the NIT Milford Station option. The use of the existing rail cut also shows a decrease in GHG emissions despite a total net increase in truck-km traveled. This increase is associated with the reduction in off-highway truck-km traveled and replaced by constant speed highway travel. Not included in this study are the short-term impacts from vehicle emissions. The reduction of off-highway truck-kilometres traveled will also reduce emissions associated with idling trucks during traffic back-ups as well as emissions associated with idling vehicles backed-up due to traffic congestion, part of which would be created by the truck traffic. Figure 9.13 provides the cumulative greenhouse gas emissions in tonnes per year (year 1) associated with each options. Consistent with earlier results, the NIT with connector configurations (Options 2 and 4) provide the greatest reduction in GHGs. The rail cut is slightly higher than the status quo at 10 tonnes more per year. Figure 9.13: Cumulative GHGs for each Study Option Option NIT Year 20, 17, 13 Rail Cut Year 1, 1, 1 SUM of GHG (tonnes/yr) (1,082) 10 9$/tonne $(9,737) $90 10$/tonne $(10,819) $100

Given a rule of thumb cost of GHG emission reduction of $9 to $10/tonne, in Table 9.14 the net cost/benefit from the increase/reduction in GHG from the proposed options is provided.

In all scenarios, the highest NPV is derived from the NIT. The real value of the removal of traffic in downtown is not the road savings but the better land use that is afforded. 9.11 NIT Figure 9.15 provides a summary of the net costs and benefits associated with the operational impacts of the NIT. Presented for the moderate growth scenario, the figure shows that the NPV of the overall savings derived from the NIT is $8.6M (from the build year 17 to year 40). Net savings are composed of a rather significant increase in handling costs at NIT which is more than offset by savings in, among other things, handling costs at HIT and the terminals as well as nearly $50M in NPV savings to truck operations through a reduction in km travelled and time efficiencies.

By far the least expensive option is to do nothing; however, this should be rejected as it offers potentially significantly higher costs for port expansion at a later date, permits continued wear and tear on downtown city streets, perpetuates continued/increasingly

congested stop and go traffic, adds congestion and therefore increases driving times for commuters, and provides no operational efficiencies for the port or the port users. The assumption under Option 0 is that the terminal will continue to grow at historical rates. Presently, the growth rates indicate an 80% increase over the next 20 years. This is shown in Figure 9.2 where a linear progression is used to fit the trend line. At this level of demand/cargo traffic, the HPA capacity of 900,000 TEUs will be achieved by year 20 (2025) under a low growth prediction and by year 17 (2022) under a moderate growth scenario. Thus, there will be the requirement for some form of expansion at that point (in effect, the status quo is more of an option to react to growth at a later date). The cost of this expansion will be on the order of $225M to $300M and occur within 20 years. The NPV of this expansion is shown in the vicinity of $170M to $205M depending on when it is needed, meaning that this is the highest cost option. At lower volume than this the best option would be to build the NIT and defer the requirement for the NOT (as shown above, this option has a NPV of between $135M and $170M, again, depending on assumed growth).7 With the NIT option, a new facility is constructed near Rocky Lake and this becomes the point where all inbound freight is grounded for local, regional and continental deliveries. As well, it becomes the drop-off point for outbound ocean freight, which will be shuttled to the terminals. With a NIT, the truck traffic to and from Ceres, HIT and Halterm becomes a function of road km to and from the inland terminal plus the rail km to and from the terminals. Furthermore, road kilometres are a function of limited access km (highway speeds assumed to be 90 kmph) and unlimited access kilometres (stop and go traffic).  Location characteristics shorten the truck trips from certain nodes throughout NS and increase the travel distance for others  Reduces the amount of restricted km  Highway time increases fuel efficiency relative to city time  Time taken from stop and go traffic reduces wait time  Better access reduces wait time  Truck-km saved to get to terminals are replaced with rail km (Ceres, HIT and Halterm). Figure 9.18 provides a synopsis where the NPV is related to the TEU capacity added.

7

Expansion of capacity can occur through the expansion of the fixed factors of production (capital equipment or land) and addition of the variable resources (e.g., labour). At some point, there is insufficient capital for labour to use (e.g., not enough gantry cranes on the dock) or, viewed the other way, there is insufficient capital for the available labour.

Note that the NPV per TEU of constructing the NIT (with connector) plus NOT is $181– $240 per TEU gained while the same ratio for the NOT alone is $308–$380. 9.14 Economic Impact Analysis (I-O model) An Input-Output (I-O) model was used to estimate the impacts associated with the construction phases of the NIT. The I-O model used was derived from Statistics Canada input-output tables, which are based on the Canadian System of National Accounts. It is a model that provides a method to track inter- and intra-industry linkages which define the relationships of the production of one good or service to the industries that generate that good or service. The I-O model used is this research is based the System of Accounts at the Large Level aggregation, using 161 industries or sectors. Expenditure data estimated for the construction of the NIT are entered in the model, which then extracts retail, wholesale and transportation margins from each expenditure item. The remaining expenditure balances are then reallocated to the appropriate industries according to the National Accounting Framework. All expenditure data entered into the model are also adjusted by an import coefficient to remove or ‘leak' portions of expenditure that are not produced in the province being analyzed – in this case, Nova Scotia. The remaining expenditure that is made in Nova Scotia is further allocated to the industries that produce the given commodity (good or service). Producing industries will, in turn, consume outputs from other sectors to produce their respective goods or services. These inter-industry relationships that show what commodity is being used by which sector and in what proportions are also provided by the input-output tables from the National Accounts.

The model is an iterative process where successive rounds of expenditures and purchases of ‘make’ and ‘use’ are run until there is no money left as a result of the leakages through imports, taxes and savings. At this point, the model stops all calculations and the total impacts, by industry and by province, are summed. 9.14.1 Class of Impacts The class of impacts that are estimated by the I-O model include direct, indirect and induced effects. These are defined below. i) Direct Impacts are production, income, employment, taxes and spending on goods and services associated with the direct construction spending in relation to the NIT. This would include expenses on labour, equipment rental and transportation, as examples. ii) Indirect Effects are production, income, employment, tax, resource or environmental changes in backward linked industries. For example, these are the impacts associated with the suppliers to the NIT construction project and, in turn, suppliers to these suppliers. Examples of indirect effects would be the impacts associated with the transactions between the NIT construction project people and a supplier of heavy equipment parts. In the study terminology, the indirect effect is the sum of the direct endogenous (first round of indirect effects or impact on first suppliers) plus the indirect effects. iii) Induced Effects are the changes in household spending caused by changes in household income. These are the impact from NIT construction workers/employees spending their wages and salaries on goods and services. As an example, it is the grader operator who spends wages earned during the construction. The total impacts are the sum of the direct, indirect and induced impacts. The results of the I-O simulation of the NIT construction impacts are described below. 9.14.2 Gross Production This is the final statistic generated by the I-O model. This is the sum of all sales by industry resulting from the sector spending being modelled. The gross production figure is interpreted as the amount of sales generated in each industry through the original expenditures in relation to the Construction. Gross Production is the combination of the direct, indirect and induced industry expenditures. The direct construction spending of $50M has a total gross economic impact of $127.39 million comprising  $46.7M in Direct Spending  $38.6M in Indirect Spending, and  $42.1M in Induced Spending The economic impact of the NIT project expressed in person-years of employment includes estimated 804.5 full-year, full time positions comprising  365 direct positions,  289 indirect positions, and  150 induced positions.

The construction project also provides a $40M estimated contribution to GDP (at market prices) comprising  $13.8M in direct contribution to GDP,  $13.9M in indirect GDP, and  $11.3M in induced contribution to Nova Scotia’s GDP. The overall contribution to Federal Government Total Tax Revenues is $5.3M through  $1.4M in direct contribution to Federal taxes,  $1.8M in indirect Federal taxes, and  $3.1M in induced contribution to Federal taxes. The NIT construction will contribute $3.4M in Provincial tax revenues through  $0.9M in direct contribution to provincial taxes,  $1.4M in indirect provincial taxes, and  $2.0M million in induced contribution to provincial taxes. 9.14.3 Operational Impacts These are, obviously, the more interesting impacts associated with the project – the longer term influences of the NIT on the local and regional economy in terms of direct and spin-off jobs and spending. These are also the impacts of the NIT with respect to the efficiencies and synergies it provides in terms of its role in creating a distribution hub in Burnside and the collateral businesses that may be encouraged to locate there. These impacts, while interesting, are difficult to foresee and therefore difficult to model. The HPA had the benefit of a recent economic impact study that we have used and applied a linear extrapolation to identify the order of magnitude economic effects that might prevail at the time NIT is built in 13 to 20 years (2018-2025). On the basis of that study, in year 17 (2022) and operating at a 900,000 TEU system capacity, the port will generate as many as 15,606 direct and indirect jobs and $1.16B in annual income generation (based on a continuation of current economic impact of $700M, 9,000 jobs). In effect, the economic benefit of the NIT option is the capacity of the Port of Halifax to continue to generate the economic benefits it provides presently, at a pace consistent with the port’s future growth. 9.15 Summary When framing a benefit/costs analysis, it is not generally acceptable to include the benefits of how that spending activity permeates the economic system. Only those benefits that flow directly from the project are to be included in the analysis except where those benefits would not have otherwise occurred within the given economic system (i.e., where the benefits are incremental). The question becomes, therefore, what proportion of economic benefits would arise in this region if the port were not here? Those benefits that are above what would otherwise exist provide the rationale for the investment in the infrastructure. As a result, it is necessary to consider these multiplier benefits and attempt to identify those that are incremental (or would not otherwise exist).

If as little as 1% of the estimated $700M of economic benefit was incremental (or would not have otherwise occurred), the 40-year stream of these incremental benefits would have a net present value (NPV) of between $970M and $1.4B (depending on the growth scenario). This would be equivalent to an average incremental economic benefit of between $14M and $22M (based on the gross impacts of $700M). Figure 9.19: Quantification of Costs and Benefits: Including Assumed Incremental I-O Benefits
Growth Scenario Low Growth Moderate Growth High Growth Low Growth Moderate Growth High Growth Low Growth Moderate Growth High Growth Low Growth Moderate Growth High Growth Benefit/ Cost Ratio 3.94 3.91 4.52 1.24 1.20 1.33 1.12 1.12 1.32 3.98 4.05 4.29

NIT

NOT w/NIT

NOT no NIT

Rail Cut

Figure 9.19 provides a consolidated analysis of the benefit/cost including the incremental economic benefits (assumed at 1% of estimated gross benefits). Because the rail cut does not contribute to capacity, the economic impacts are assumed to remain unchanged once the capacity is reached, based on the low, moderate and high growth scenarios (i.e., 20 , 17 and 13 years). In reality, it is likely that as capacity is reached and terminal operators work at this level, inefficiencies will emerge that will contribute to cost or cause shippers to leave and use services elsewhere in the port or even other ports. As such, the assumption that the economic benefits remain constant at the constrained level will tend to overstate the true condition and, therefore, the benefit/cost ratios for the rail cut may be lower than those provided.

10.0 Stakeholder Consultations
A number of stakeholders were consulted during the course of this study, including shipping lines, the trucking community, terminal operators, and Canada Customs. Information was also obtained from the Halifax Employers Association. In most cases, the meetings were held face to face although in some instances the telephone was the only option. During the interviews, the concepts of the rail cut and the NIT were presented, explained as necessary and discussed. Interviewees were solicited for their comments/concerns as well as for information pertinent to the study. Much of the data used for the study was obtained in this fashion and we are grateful to the participants for their insight. What follows is a summary of the main issues and concerns raised during the interviews: 10.1 Shipping Lines The shipping lines were most concerned about cost and service levels. Most supported the objective of reducing trucks in the city, particularly in the downtown area, but not at any cost. Five shipping lines interviewed raised the issue of the additional costs and expressed concerns that they would end up paying for these extra costs and yet be unable to recover these costs from either offsetting savings or from the freight. Two of the interviewees suggested their firms may have to book local Halifax cargo on a port to port basis only. The improved availability of the containers at the NIT with longer hours of operation was viewed as a very minor advantage particularly as container terminals presently have reasonable truck turnaround times and local containers are generally readily available (no chronic congestion). Concern was expressed over who would operate the shuttle and the NIT and how service levels would be maintained in the long term. The extra step of moving the containers to and from a NIT was seen as an extra cost burden, a delay and a potential for service failure. Oceanex handles a lot of perishables, higher value and time-sensitive cargoes and presently offers a late gate service to their customers on Friday evenings and Saturday mornings. They compete with trucks to Newfoundland and if they do not accept late arrivals, the freight is lost to them. Even with scheduled shunts to match the requirements of the Oceanex sailings, the service level could not match the present practice. Ocean carriers (as a group) do not generally rely on late gates. 10.2 Terminal Operators Ceres, Halterm and Logistec were interviewed both to reconcile the number of trucks per day and to share their thoughts on the rail cut and the inland terminal options being studied. Generally they expressed the opinion that there is still unused capacity to handle containers in Halifax, that the service levels at their respective facilities were

better than they have been in the past and that there were other (less expensive) ways to reduce traffic. The rail cut was seen as a positive, although limited, solution if only one-way traffic was possible. 10.3 Trucking Community The trucking community was generally more positive and would be happy to avoid city traffic and achieve better truck turnaround times. Long haul truckers are most interested in the extended hours of operation while local trucking companies are most interested in increasing their number of trips per day. The rail cut option was also seen in a positive light although not if it became a toll road. Some trucking companies have acquired handling equipment and store some containers at their facilities rather than have to call at port terminals on every trip, while other long haul trucking companies sub-contract port calls so they can hook and haul on arrival and not be tied to the hours of operation of the terminals. 10.4 Customs (protection) There exist several opportunities for improved security protection with a NIT concept and all but emergency inspections could be postponed until the containers reached the NIT. It is expected that so-called door inspections of containers destined for rail would also continue to be performed at the port terminals. 10.5 Summary Figure 10.1 provides a summary of stakeholder impacts:

11.0 Value Added Opportunities
In 2004, the Halifax Port Authority, Greater Halifax Partnership and the Office of Economic Development sponsored a study to examine the potential to attract additional distribution activity to the Halifax region, to attract additional shipping lines to call at the port. Several retailers and major shippers were identified who were interested in shipping more cargo through Halifax. The timing of the study coincided with congestion being experienced at ports on both the Canadian and US west coasts. Several ports on the US east coast have been able to lever the location of distribution centres nearby to attract a new breed of all-water shipping services from the Far East. The two best North American examples of ports that have levered the location of distribution activities into additional container throughput are Savannah and Norfolk. The Port of Savannah has experienced consistent, strong volume growth for each of the past five years. This volume growth has been driven by a number of factors – notably, an emphasis on all-water services from Asia and a strong push by the Georgia Ports Authority in concert with the Savannah Economic Development Authority to attract new logistics/import distribution centres to southeastern Georgia. In 1995 Home Depot was one of the first of the major retailers to locate a distribution facility near the port of Savannah. Figure 11.1 identifies the major retail companies that have located distribution facilities in and around Savannah to handle imported containerized shipments. The figure also shows the total size of these companies’ existing facilities. Figure 11.1: Savannah Distribution Centres
Best Buy California Cartage/ Kmart Dollar Tree Fred's Hugo Boss Lowe's Michael's Pier 1 Imports The Home Depot Wal-Mart (Savannah) The Bombay Company Source: Port Publications 700,000 sq. ft. (65, 032 sq. m) 191,216 sq. ft. (17, 765 sq. m) 800,000 sq. ft. (74,322 sq. m) 600,000 sq. ft. (55, 742 sq. m) 165,000 sq. ft. (15,339 sq. m) 750,000 sq. ft. (69,977 sq. m) 400,000 sq. ft. (37,161 sq. m) 800,000 sq. ft. (37,161 sq. m) 1, 400,000 sq. ft. (130,064 sq. m) 1,300,000 sq. ft. (120,774 sq. m) 250,000 sq. ft. (23,226 sq. m)

Most of these retailers are located in the Crossroads Business Center, a 2,000-acre (809 ha) site being developed by private real estate firms. Savannah’s geographic position as the first major port north of the Panama Canal on the east coast with uncongested access to major highways and Class 1 railroads is a major advantage. The Port’s location allows carriers to maintain highly competitive transit times versus other East Coast alternatives.

Like Savannah, the Virginia Port Authority has spent considerable energy attracting over 30 distribution centres to locate within the state and relatively close to the port. Their reasoning is that if a carrier desires to carry a certain shipper’s or retailer’s cargo, then this will lock them into a Norfolk port of call. Likewise, the port’s inland terminal, called Virginia Inland Port, serves these distribution centres and offers speedier access to cargo. Figure 11.2: Virginia Inland Port

Source: Virginia Port Authority, www.vpa.com

In Halifax, the opportunity appears to be to attract cargo from the Indian sub-continent, South East Asia and the Pearl River Delta in a westbound direction through the Suez Canal, rather than eastbound via the Panama Canal. In the short term, it appears that several companies are interested in transloading containers and domestic trailers at either a third party (3PL) warehouse or their own facility. Indeed, during the course of this study, Canadian Retail Shippers’ Association announced it would be shipping 4,000 TEUs from the Indian sub-continent and China via Halifax, which will be transloaded to a warehouse operated by Armour Transportation Group. This option will make better use of containers moving westbound with import cargo. This same cargo is transferred into trailers in Toronto for shipment back east, and the containers are often shipped empty back to Halifax. For the present study the following retailers and 3PLs were contacted:  HBC Logistics  Loblaws  Canadian Tire Corporation  CRSA  Wal-Mart  Home Hardware  Home Depot  FastFrate

 HUDD There seems to be willingness and a new commitment on the part of some major shippers to move additional Far East and Indian sub-continent cargo through the Port of Halifax. The immediate concern is a lack of shipping space either on all-water Panama services or Suez services coming into Halifax. One major shipper indicated there is not enough choice in either carriers or rail service to lock them into the Halifax gateway. In terms of value-added opportunities afforded by a NIT, there appear to be many synergies that could be developed between the NIT and local shippers and both regional and national distributors. At a minimum, the inland terminal results in better asset utilization in terms of trucking units. Assuming the Burnside Connector is built along with the terminal, it potentially offers much quicker access to warehouses and distribution facilities. It also opens up the northern portion of Burnside Industrial Park to the development of a new generation of distribution warehouses, a so-called Distripark concept. At least two 3PLs that were contacted expressed an interest in operating the terminal once it is built. The shippers contacted all said they are planning to ship additional cargo through the port in 2005 and that this initiative will be watched with considerable interest.

12.0 Value Proposition
The NIT is a compelling project with a number of potential winners and few losers, providing the timing is correct. The NIT reduces peninsular truck traffic. It saves wear and tear on local roads and reduces air pollution in the downtown core. The NIT increases the capacity of the existing container terminals and postpones the need to construct a NOT, with the timing dependent upon the port’s overall growth. The NIT allows CN to move its HIT and consolidate with NIT, leading to efficiencies. It also provides some potential to consolidate NIT, Rockingham, HIT and the Dartmouth yard at one location. It potentially frees up Rockingham for other uses and HPA could acquire the HIT site to develop an expanded multi-use terminal at Richmond Terminal. The NIT allows for better truck turnaround times for import/export cargo, for both regional and Halifax cargo. Truckers serving the Maritimes will not have to come into the city to pick up or deliver cargo. Truckers serving the local market will get better asset utilization and easier access to local pick up and delivery in area industrial parks. There are potential spin-offs in terms of the development of distribution centres near the NIT in the area of the Bedford Industrial Park or Burnside. The NIT potentially opens up the northern portion of Burnside Industrial Park for additional distribution activity. For the provincial Department of Transportation and Public Works and HRM, the NIT provides justification for proceeding with the Burnside Connector. The cost of the project can be shared amongst a number of parties who stand to benefit, including Halifax Port Authority, Halifax Regional Municipality, CN, the Province of Nova Scotia, the Municipal Group and a 3PL company. The project generates total economic impact of $130M in the construction phase. It enhances the port’s overall economic impact by generating an additional 15,606 direct and indirect jobs and $1.16B in annual income generation. As a stand-alone entity, the cost/benefit is negative. However, the alternative to building NIT – building a NOT – is more expensive. The Rail Cut option removes some trucks from downtown streets, and sends them through a neighbourhood of very expensive homes and universities. It will reduce wear and tear on downtown streets but requires a $40M investment to build. The truckway only ‘benefits’ Halterm and Logistec, unless an expensive flyover is built, in which case it could potentially accommodate buses. The Rail Cut provides no real value or competitive advantage for the port and few spinoffs in terms of distribution activity. It may result in slightly better access for local shippers, depending upon whether they can plan around the inbound/outbound schedule. There are few opportunities for partnering and little motivation for other entities besides HRM to invest in the Rail Cut option, unlike the NIT.

13.0 Conclusions It is quite apparent there is not now sufficient congestion at either terminal or in downtown Halifax to justify the NIT. Moreover, whatever port congestion there is relates to moving cargo inland to Quebec, Ontario and the US Midwest, not cargo trucked to local or regional destinations. The NIT is justified only by the avoidance of capital costs required to build a NOT. An investment of $60M in NIT provides an additional 250,000 TEUs in handling capacity, whereas an investment of $300M in NOT provides an additional 550,000 TEUs of capacity. The NIT is the lowest cost option for increasing port capacity when it becomes required. When congestion does occur, handling costs will have escalated and trucking advantages will increase, particularly if Burnside can attract a number of distribution centres. From an overall perspective the operating costs can be slightly better than break even despite the additional handling as long as sufficient captive railcars are provided to ensure that locally destined freight can go directly to rail. The overall impact on the costs within the supply chain are detailed in Section 6.0 and summarized in Figure 6.1. A NIT located at Rocky Lake would provide a reduction in overall costs of $313,000 when the entire supply chain is considered. The actual cost to operate the terminal will depend on negotiations amongst the interested parties and how much each is willing to contribute towards achieving a positive outcome. That is, it will depend on the cost to acquire the land in a prepared state, the contribution of various levels of government including HRM, the contribution of HPA, the cost to operate the shuttle and the terminal after consolidating HIT and NIT, and the cost of labour and equipment. It is therefore recommended that the Halifax Port Authority and partners adopt a plan now, to have a NIT built by the time the port is handling 900,000 TEUs per annum. Negotiations should begin regarding the Rocky Lake site and some combination of HRM, HPA and CN should acquire this property in a prepared state. When the existing terminals are within 1-2 years of reaching capacity, an operating company should be established. A management strategy should be implemented to work with stakeholders (terminals, shipping lines, shippers, truckers, labour) to ensure a smooth transition to the new entity. Consideration should be given to providing the new entity with short term operating support. The railway cut, which for the purposes of this discussion can be seen as a link between the Bayers Road/Bi-High entrance and the Ocean Terminals, can be looked upon as an underutilized transportation resource within HRM. However, CN has reviewed the proposed shared operation and determined it to be impractical without significant costs. Its use as a truckway reduces wear and tear on city streets but requires a $40M investment to build. There is no financial return which can justify such an investment, even with projected future truck volumes. The best option for removing trucks from city streets, reducing GHGs and adding port capacity, is the construction of NIT.